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Dear Tutors
I have a question please.
If there was a loan interest paid from subsidiary to the parent, will the Reversing adjustment go into consideration when calculating the profit for the year for subsidiary (in order to calculate NCI)?I hope it make sense. Or this adjustment will be siting separately and will not affect calculation for NCI?
Thank you very much
Hi,
The elimination of the i/co interest goes through the adjustment column as it does not impact the group profits overall.
However, you need though to ensure that the amounts have been included in the individual accounts of the parent and subsidiary first. If they haven’t then you must record them and this would impact S’s profits which then impacts the NCI.
Thanks
I’m a bit confused. Let’s have a look at the BPP exercise I’ve been doing. What do we have:
Profit or loss statement:
Parent. Subsidiary. Adj. Group
Finance cost. (200). (35). 20. (215)
Finance income. 50. – (20) 30So is this way correct? Or maybe subsidiary’s finance cost In this case needs to be adjusted by $20 in its column?
Regards
Oh the whole thing looks bad now. It has all moved to one side when I clicked Submit…
When we are looking at proforma we can see that those finance cost/ income adjustments sit separately. At which point do we include them in calculation please?
Hi,
I can see what you’re doing and it’s correct. The entry to remove the intra-group interest is made in the adjustments column. Any entry that posts a debit and credit entry to profit or loss will always be adjusted in the adjustment column as it will not impact the overall group profit.
Thanks
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