Evaluate the value of non-controlling interest, Financial Accounting

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The additional 20% purchase by RBE results is enhancing in the controlling interest held in the subsidiary, DCA. No additional goodwill is calculated on the additional purchase as goodwill is only calculated at the date control was gained in accordance with IFRS 3. However, at the date of the further purchase (1 October 2010) the value of NCI needs to be established. The proportion "sold" will be transferred from NCI to parent's equity within the SOCIE. The difference between that value and the consideration transferred is included in parent's equity as an "adjustment to parent equity" on acquisition.

 

Statement of changes in equity for the year ended 31 December 2010 Attributable to equity holders of the parent

Non-controlling interest

Total

Equity

 

$000

$000

$000

 

Balance at the start of the year

3,350

650

4,000

 

TCI for the year (W1)

1,350

150

1,500

 

Share issue (2m x $1.30)

2,600

2,600

 

Dividends

(200)

(30) (W2)

(230)

 

Adjustment to NCI for additional purchase of DCA shares (W3)

(503)

 

Adjustment to parent's equity

(37) (W3)

-

(37)

 

Balance at the end of the year

7,063

267

7,833

Working 1

$000

 

NCI share of total comprehensive income of DCA $600,000:

 

NCI at 30% x $600,000 x 9/12 months

135

 

NCI at 10% x $600,000 x 3/12 months

15

 

NCI share of TCI

150

 

Therefore parent share of TCI of DCA is $600,000 - $150,000 = $450,000.

Total TCI attributable to equity holders of parent is $900,000 +$450,000 = $1,350,000.

Working 2

NCI share of dividend paid April 2010 by DCA = 30% x $100,000 = $30,000.

Working 3

Value of NCI at 1 October 2010 is $650,000+$135,000(W1)-$30,000(W2) = $755,000

Therefore the value transferred is $755,000 x 2/3 = $503,333 Adjustment to parent's equity

$000

Consideration transferred

540

Value of non-controlling interest transferred

(503)

Adjustment to parent equity

37


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