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Hi Mike,
I wanted to ask a question regarding the calculation of total NCI. I’ve been practicing with OT style of consolidation and I’m used to that. I saw in a BPP answer that the calculation of total NCI was done a bit differently.
I’m making up an example
T owns 60% of P, and P owns 70% of C. Also T owns a direct stake of 14% in C.
So according to BPP the total NCI is 44% by calculating our effective interest and then deducting from 100 [ (60% x 70%) +14 ] -100 = 44%
But my calculations give me a total NCi of 58% [ (40% x 70%) + 30% ]
Please tell me if my working is correct?
Does it matter if I follow BPP when calculating total NCI?Much appreciated.
Sorry to barge in, but I hope Mike doesn’t mind me giving you an answer while you’re waiting for his official response!
Your NCI working is not quite correct. The direct NCI of C is not 30%, it is 16%. Although P owns 70% of C, don’t forget that T owns 14% in C too. Therefore, 30% – 14% = 16% for the direct NCI.
Neil, you’re always welcome to barge in …. in the general forum!
shahrukhjatoi, as Neil so correctly points out, you have to work out where the C shares are held.
14% are held by A, 70% are held by B so there’s only a further 16% held by the direct nci
OK?
OK thank u. That clears it up.
Also, I just want to confirm that the goodwill working will be “T in P”, ” T in C” and then “P in C” right?
Thanks.
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