Page 481 - SBR Integrated Workbook STUDENT S18-J19
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Answers
Example 4
Share purchases
Control already existed before the share purchase. No profit or loss arises in
the consolidated financial statements and goodwill is not remeasured. The
transaction is accounted for in equity.
The non-controlling interest will be reduced by $1.5 million ((5/20) × $6m). The
difference between this and the cash consideration equals $0.5 million, which
will be recognised as an increase in other components of equity.
The adjustment required is as follows:
Dr NCI $1.5m
Cr Other components of equity $0.5m
Cr Cash $1.0m
Example 5
Share sales
There is no loss of control. No profit or loss arises in the consolidated financial
statements and goodwill is not remeasured. The transaction is accounted for
in equity.
The non-controlling interest will be increased by $3 million (10% × ($7m +
$23m)). The difference between this and the cash proceeds equals $1 million,
which will be recognised as a decrease in other components of equity.
The adjustment required is as follows:
Dr Cash $2.0m
Dr Other components of equity (bal. fig.) $1.0m
Cr NCI $3.0m
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