Corporate: Generally Accepted Accounting Principles and General Reserve
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Corporate Accounting IIIAssignment 2 Question 1: What is the difference between direct and indirect NCI? Under AASB127, the group is required to prepare the consolidation statement when parent entity acquires shares in the subsidiary. There are two parties who own shares in the subsidiary if it’s not a wholly-owned subsidiary consolidation. One is the parent entity while the other is non-controlling interest. Non-controlling interest (NCI) is defined as “the portion of the profit or loss and net assets of a subsidiary attributable to equity interest that are not owned, directly or indirectly through subsidiaries, by the parent” (Leo, et, al. 2009, p. 895). The NCI can be classified as either direct (DNCI) or indirect (INCI). …show more content…
NCI share of Singapore (1/7/05) (25%) Retained earning $1,250 General Reserve $250 Share capital $5,000 NCI $6,500
Measurement of NCI
Retained earning | $5,000*25% | $1,250 | General Reserve | $1,000*25% | $250 | Share Capital | $20,000*25% | $5,000 | NCI | | $6,500 |
3). NCI share of changes in equity (1/7/05---30/6/09)
DNCI (25%) INCI (15%)
Retained earnings (1/7/09) $1,250 NCI $1,250
(25%*($10,000-$5,000) Retained earnings (1/7/09) $900 NCI $900
(15%*(10,000-$3,000/0.75)=$900)
4) NCI share of equity in Singapore (1/7/09---30/6/10) NCI share of profit $3,120
NCI $3,120
[(25%+15%)*$7,800]
NCI $1,000 Dividend paid $1,000 [$4,000*25%] NCI $500 Dividend Declared $5,00 Measurement of NCI
Retained Earning |