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

Under AS 21, minority interest in the net assets of a subsidiary at the consolidated balance sheet date consists of the minority's share of equity at the date the investment was made plus which other element?

Minority interest in net assets equals the minorities' equity share at the date of investment plus their share of movements in equity since the parent-subsidiary relationship began, as AS 21 provides. The parent's post-acquisition reserves share belongs to the parent's shareholders.

  1. AThe minorities' share of movements in equity since the parent-subsidiary relationship came into existenceCorrect
  2. BThe parent's share of post-acquisition reserves of the subsidiary
  3. CThe minorities' share of the subsidiary's pre-acquisition capital profits only
  4. DThe cost to the parent of its investment in the subsidiary

Explanation

AS 21 states that minority interest in net assets comprises the equity attributable to minorities at the date of investment and the minorities' share of movements in equity since the relationship began. The parent's share of post-acquisition reserves belongs to the majority, not the minority, so option 2 is wrong.

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