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Value of NCI

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FR Exams › Value of NCI

  • This topic has 2 replies, 2 voices, and was last updated 1 year ago by P2-D2.
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  • Author
    Posts
  • November 9, 2021 at 1:17 pm #640271
    ty0311
    Participant
    • Topics: 17
    • Replies: 5
    • ☆

    Hi Chris,

    Great lecture on Consolidated SFP!

    I noted that there are 2 methods to value the NCI to show under Equity in the Consolidated SFP. Can you please help with my understanding of the below:

    (say if a Parent and a NCI acquired a subsidiary 1 year ago)

    then for the Parent’s consolidated SFP:
    (i) If I am asked to ‘use the proportionate share of net assets’ method, the value of NCI to show as of current reporting date (so 1 year after acquisition) will be the NCI’s share of Subsidiary * Subsidiary’s net asset

    (ii) If the fair value method is used, the value to show will be the NCI’s fair value at acquisition PLUS the NCI’s share of the subsidiary’s movement in retained earnings since acquisition.

    When I tried to do my own calculations, I realize for (i), the value of NCI should be NCI’s share of Subsidiary * Subsidiary’s net asset
    PLUS the NCI’s share of the subsidiary’s movement in retained earnings since acquisition, in order to have my Asset, Equity + Liability figures to balance out in the SFP.

    Am I missing something here or is this the right concept?

    Much appreciated!

    Thanks and Regards,
    Tim

    November 9, 2021 at 4:26 pm #640305
    ty0311
    Participant
    • Topics: 17
    • Replies: 5
    • ☆

    I worked out the issue myself but thank you anyways =)

    November 13, 2021 at 8:42 am #640537
    P2-D2
    Keymaster
    • Topics: 4
    • Replies: 6440
    • ☆☆☆☆☆

    Ah! You’re too quick! Glad you enjoyed the lecture and hope the studies are still going well.

    Thanks

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    Posts
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