Question 1

Food & Bev Holdings acquires 75% of SnackCo. At the reporting date, SnackCo reports a profit after tax of $100,000. During the year, SnackCo sold goods to Food & Bev Holdings, and there is an unrealized profit of $20,000 in Food & Bev's closing inventory. What is the Non-Controlling Interest (NCI) share of SnackCo's profit for the year?

Accepted Answer

1. Identify who made the sale (SnackCo, the subsidiary). 2. Deduct the unrealized profit from the subsidiary's profit. 3. Multiply the adjusted profit by the NCI percentage (25%).

Question 2

What mistakes do candidates make on this ACCA question?

Accepted Answer

Not adjusting the subsidiary's profit for the PURP, leading to $25,000 (Option A).

How to approach this question

Full Answer

Common mistakes

Practice the full ACCA FA — Financial Accounting Practice Exam 4

More questions from this exam