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ACCA Strategic Professional · Strategic Business Reporting (International) · Group accounting including statements of cash flows

Parent P owns 75% of S, and S owns 80% of T. P's effective interest in T is 60%. During the year, T's profit after tax was $200,000 and there were no intragroup transactions. What is the total profit of T attributable to the non-controlling interests (all NCI in the group, both in S and in T) in P's consolidated statement of profit or loss?

The NCI share of T's profit is $80,000. P's effective interest is 75% x 80% = 60%, leaving 40% to non-controlling interests. Applying 40% to T's $200,000 profit gives $80,000, comprising $40,000 for T's direct NCI and $40,000 for S's NCI.

  1. A$80,000Correct
  2. B$120,000
  3. C$40,000
  4. D$90,000

Explanation

P's effective interest is 75% x 80% = 60%, so the NCI share of T's profit is 40% x $200,000 = $80,000. Of this, 20% ($40,000) belongs to direct NCI in T and 20% ($40,000) to S's NCI (25% x 80% x $200,000). $120,000 is the parent's share. $40,000 counts only the direct NCI in T.

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