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ACCA · Question 39 · Preparing simple consolidated financial statements
Scenario: TechNova PLC acquired 80% of CyberNetix Ltd on 1 Jan 20X5 for $500,000 cash. At acquisition, CyberNetix's retained earnings were $200,000 and share capital was $100,000. NCI fair value at acquisition was $120,000. During 20X5, TechNova sold goods to CyberNetix for $80,000 (25% mark-up on cost). Half remained in inventory at year-end (31 Dec 20X5). CyberNetix's 20X5 profit was $150,000.
What is the Non-Controlling Interest (NCI) share of CyberNetix's post-acquisition profit for the year? (Enter numbers only)
Scenario: TechNova PLC acquired 80% of CyberNetix Ltd on 1 Jan 20X5 for $500,000 cash. At acquisition, CyberNetix's retained earnings were $200,000 and share capital was $100,000. NCI fair value at acquisition was $120,000. During 20X5, TechNova sold goods to CyberNetix for $80,000 (25% mark-up on cost). Half remained in inventory at year-end (31 Dec 20X5). CyberNetix's 20X5 profit was $150,000.
What is the Non-Controlling Interest (NCI) share of CyberNetix's post-acquisition profit for the year? (Enter numbers only)
How to approach this question
Multiply the subsidiary's profit for the year by the NCI percentage.
Full Answer
NCI percentage = 100% - 80% = 20%. NCI share of profit = 20% * $150,000 = $30,000.
Common mistakes
Applying the 80% parent share instead of the 20% NCI share.
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