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CA Intermediate · Advanced Accounting · AS 21 Consolidated Financial Statements

Kaveri Ltd acquired 80% of the equity shares of Narmada Ltd on 1 April 2025. Narmada Ltd's profit after tax for the year ended 31 March 2026, all earned after acquisition, is Rs 5,00,000. Ignoring all other adjustments, what is the minority (non-controlling) interest's share in the profit of the year to be shown in the consolidated statement of profit and loss?

The minority interest's share is Rs 1,00,000. Since the parent holds 80%, outsiders hold 20%, and 20% of the subsidiary's post-acquisition profit of Rs 5,00,000 is allocated to them. The parent's share of Rs 4,00,000 is the wrong figure.

  1. ARs 1,00,000Correct
  2. BRs 4,00,000
  3. CRs 5,00,000
  4. DRs 1,25,000

Explanation

Minority holds 100% - 80% = 20%. Share of profit = 20% x Rs 5,00,000 = Rs 1,00,000. Rs 4,00,000 is the parent's share, not the minority's.

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