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Total NCI Claculation

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA SBR Exams › Total NCI Claculation

  • This topic has 6 replies, 3 voices, and was last updated 9 years ago by MikeLittle.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • November 16, 2015 at 8:42 pm #283137
    shahrukhjatoi
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    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.

    November 16, 2015 at 9:03 pm #283151
    neilsolaris
    Member
    • Topics: 59
    • Replies: 415
    • ☆☆☆

    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.

    November 17, 2015 at 5:56 am #283198
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    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?

    November 17, 2015 at 12:28 pm #283307
    shahrukhjatoi
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    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.

    November 17, 2015 at 2:07 pm #283369
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    That’s the way I would do it, yes

    November 18, 2015 at 11:08 am #283569
    shahrukhjatoi
    Member
    • Topics: 1
    • Replies: 3
    • ☆

    Thanks a million !!

    November 18, 2015 at 11:29 am #283581
    MikeLittle
    Keymaster
    • Topics: 27
    • Replies: 23321
    • ☆☆☆☆☆

    You’re welcome

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    Posts
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