katie
New Member
Posts: 3
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Post by katie on Sept 2, 2015 18:03:26 GMT
Hi
I wonder if someone can help me?
I am calculating adjustments to parents equity where you have Cost/paid amount x NCI. x = Adj to parents equity x
When calculating the NCI element I am taking the net assets and times this by % brought/sold then dividing it by the original NCI percentage, however in some questions I have done this is not the case, the NCI element is being calculated by net assets x original NCI percentage. I am struggling to understand the difference is someone able to explain this to me?
Example JL acquired 80% of DP then sold 25% half way through the year, NCI is measured at proportionate share of net assets Answer Cost of 25% 4400 NCI 3780 (18900 x 20%) this is the bit I don't understand! Adj to parent equity 620
Example 2 Blt acquired 60% then acquired a further 20% half way through the year, NCI equity at acq 127000, NCI is measured at proportionate share of net assets, 30000 profit was made during the year Cost 135000 NCI 66500 (127000 + (30000 / 12 x 6) x 20% / 40% Adj to parent 68500
My question is why is the NCI calculated differently from example 1 and 2?
Please help so confused
Thanks
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bmer
Junior Member
Posts: 64
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Post by bmer on Sept 16, 2015 11:54:00 GMT
On your first example the entity sold 25% of its 80% stake therefore 20% of total equity hence the 20% calculation
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