ExpertEasy1 markShort Answer
ACCA · Question 37 · Preparing Simple Consolidated Financial Statements
Section B - Case 1
Scenario: GlobalTech PLC acquired 80% of CloudServe Ltd on 1 July 20X5. Year-end is 31 December 20X5. GlobalTech paid $5m cash and issued 1m shares (market value $2 each). CloudServe's net assets at acquisition were $6m. Fair value of NCI at acquisition was $1.5m. Post-acquisition, CloudServe sold goods to GlobalTech for $1m at a 25% mark-up on cost. Half of these goods remain in inventory at year-end. CloudServe's profit for the full year was $800k (accruing evenly).
What is the percentage of the Non-Controlling Interest (NCI) in CloudServe Ltd?
Section B - Case 1
Scenario: GlobalTech PLC acquired 80% of CloudServe Ltd on 1 July 20X5. Year-end is 31 December 20X5. GlobalTech paid $5m cash and issued 1m shares (market value $2 each). CloudServe's net assets at acquisition were $6m. Fair value of NCI at acquisition was $1.5m. Post-acquisition, CloudServe sold goods to GlobalTech for $1m at a 25% mark-up on cost. Half of these goods remain in inventory at year-end. CloudServe's profit for the full year was $800k (accruing evenly).
What is the percentage of the Non-Controlling Interest (NCI) in CloudServe Ltd?
How to approach this question
Subtract the parent's ownership percentage from 100%. 100% - 80% = 20%.
Full Answer
GlobalTech PLC acquired 80% of CloudServe Ltd. The remaining percentage not owned by the parent is the Non-Controlling Interest (NCI). 100% - 80% = 20%.
Common mistakes
Using the fair value figures to calculate a percentage instead of the stated ownership.
Practice the full ACCA FA — Financial Accounting Practice Exam 6
65 questions · hints · full answers · grading
More questions from this exam
Q01Section A
GlobalHealth Initiative, an international NGO, receives a restricted grant of $500,000...MediumQ02Section A
Quantum AI Ltd, a tech startup, has developed a proprietary algorithm. The directors w...MediumQ03Section A
HydroGrid PLC, a public utility company, receives a $24,000 payment on 1 October 20X5 ...MediumQ04Section A
AgriGrow Ltd operates a large commercial farm. At year-end, they have 10,000 tonnes of...MediumQ05Section A
SteelForge Heavy Industries purchased a blast furnace on 1 January 20X2 for $5,000,000...Hard