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CS Executive · Corporate Accounting and Financial Management · Consolidation of Accounts

H Ltd holds 90% of M Ltd, and M Ltd holds 60% of N Ltd. For the year, M Ltd's own profit (excluding any income from N) is Rs 5,00,000 and N Ltd's profit is Rs 2,00,000. Ignoring dividends, goodwill and unrealised profits, what is the profit for the year attributable to non-controlling interests in H's consolidated statements?

The non-controlling interest share of profit is Rs 1,42,000, being 10% of M's Rs 5,00,000 plus 46% of N's Rs 2,00,000. H's effective interest in N is 54%, so outsiders hold 46% of N's profit.

  1. ARs 1,52,000Correct
  2. BRs 1,80,000
  3. CRs 1,28,000
  4. DRs 1,48,000

Explanation

NCI in M = 10% x Rs 5,00,000 = Rs 50,000. H's effective interest in N = 90% x 60% = 54%, so NCI in N = 46% x Rs 2,00,000 = Rs 92,000. Total NCI = Rs 50,000 + Rs 92,000 = Rs 1,42,000. Check: group profit Rs 7,00,000; H's share = 90% x 5,00,000 + 54% x 2,00,000 = 4,50,000 + 1,08,000 = 5,58,000; NCI = 7,00,000 - 5,58,000 = Rs 1,42,000. This is not among the options, so the stated key is incorrect.

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