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Hi, could you please show me the correct answer for 2 methods for step disposal treatment, I am confused as BPP tells answers in both ways:
e.g.
Acquisition at year start:
FV of NCI at acquisition: 2
FV of NA at acquisition: 5
Goodwill: 7Profit for the year of subsidiary: 10
Suppose NCI increase from 20 to 30% at year endMethod 1:
Carrying value of CGU at transfer: 7+ 5 + 10 = 22
Transfer to NCI: 22 * 10% = 2.2
NCI at year end: 2 + 10*20% + 2.2 = 6.2Method 2:
NCI prior to transfer: 2 + 10*20% = 4
Transfer to NCI: 4 * 10%/20% = 2
NCI at year end: 4 + 2 = 6I expect same results under both methods, please help. Thanks.
I can see the logic of method 2 – please stick to that and delete the other one.
In any case remember that the marks are given for approach rather than calculation that corresponds to the answer.
What is much more important is that you could explain what you are doing in clear terms.
Can you see that method 2 would be much easier to explain?
Thank you! Cause I see the both ways have their own principle (method 1 share is computed from CGU and method 2 is from NCI perspective) then dont know which is right.
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