ACCA FR · Chapter 12 · Question 8 of 13
During the year Civet Co, a 70%-owned subsidiary, sold goods to its parent for $600,000 at a gross margin of 20%. At the year end the parent still held goods bought from Civet Co for $150,000. NCI is 30%. What is the effect of the unrealised profit adjustment on NCI in the consolidated SFP?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) NCI is reduced by $9,000
Explanation
Unrealised profit = $150,000 x 20% = $30,000. The subsidiary was the seller, so the adjustment reduces the subsidiary's post-acquisition profits and is shared between group and NCI. NCI share = 30% x $30,000 = $9,000. The group share of $21,000 reduces group retained earnings.
More Consolidated statement of financial position MCQs
- Q10Ermine Co acquired 75% of Stoat Co. NCI was measured at its fair value of $2,400,000 at acquisition. Since then Stoat Co's retained…
- Q11Where NCI is measured at its proportionate share of the subsidiary's identifiable net assets, how is an impairment of goodwill dealt with…
- Q12Under IFRS 3, what should an acquirer do if the fair value of the net assets acquired is higher than the total of the consideration…
- Q13At the acquisition date, Sable Co (a newly acquired subsidiary) is being sued and has a present obligation arising from a past event. An…
- Q1Under IFRS 10, an investor controls an investee when it has which of the following?