At the year end, Sub Ltd, an 80% owned subsidiary, has net assets of £520,000. What non-controlling interest is shown in the consolidated statement of financial position, assuming NCI is measured at its proportionate share of net assets?
Answer and explanation
Correct answer: C. £104,000
- Step 1: The NCI is the share of the subsidiary's net assets at the reporting date that belongs to outside shareholders.
- Step 2: 20% × £520,000 = £104,000.
Answer
£104,000.
Why not the others: £416,000: This is the parent's share, not the NCI. £90,000: This uses net assets at acquisition instead of at the reporting date. £520,000: This is 100% of the subsidiary's net assets, whereas only 20% belongs to the non-controlling shareholders.
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