15 The effects of the NCI on the goodwill recognised in the consolidation

15 the effects of the nci on the goodwill recognised

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The effects of the NCI on the goodwill recognised in the consolidation process Analysing the two methods For each business combination resulting in a parent owning less than 100% of shares in the subsidiary, the parent must choose which method of measuring NCI it adopts. A parent can use the full goodwill method for some partially owned subsidiaries and the partial goodwill method for others. 16
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The effects of the NCI on the goodwill recognised in the consolidation process Why did the standard setters allow a choice of methods? What is the effect of choosing one method over the other? 17
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Calculating the NCI share of recorded equity The NCI share of consolidated equity is calculated in two stages: The NCI share of ‘recorded equity’, which is the equity contained in the records of the subsidiary itself plus any BCVR recognised at acquisition date. The adjustments to the NCI share of recorded equity due to the effects of intragroup transactions. 18
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Calculating the NCI share of recorded equity Basic principles The NCI is entitled to a share of the recorded equity of the subsidiary as measured at the end of the period for which the consolidated fnancial statements are being prepared.
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Calculating the NCI share of recorded equity
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Calculating the NCI share of recorded equity Step 1: Measurement of the NCI at acquisition date This section describes step 1 in the calculation of the NCI share of equity at acquisition date and illustrates the effects that the existence of the NCI has on the acquisition analysis, BCVR entries and preacquisition entries at acquisition date. The acquisition analysis and the consolidation worksheet entries at acquisition date are affected by whether the full goodwill or partial goodwill method is used in the measurement of the NCI at acquisition date. 21
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Calculating the NCI share of recorded equity Step 2: Measurement of the NCI share of changes in equity between acquisition date and beginning of the current period To prepare the step 2 NCI journal entries, it is necessary to note any changes in the equity of the subsidiary between the acquisition date and the beginning of the current period. 22
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Calculating the NCI share of recorded equity Retained earnings BCVR General reserve Summary. 23
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Calculating the NCI share of recorded equity Step 3: Measurement of the NCI share of changes in equity in the current period Proft Transfer from general reserve Dividends. 24
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Calculating the NCI share of recorded equity Posting the NCI entries into the consolidation worksheet
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Calculating the NCI share of recorded equity Posting the NCI entries into the consolidation worksheet
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Adjusting NCI for the effects of intragroup transactions To ensure the NCI only gets a share of the consolidated proft, further NCI entries are made in relation to the effects of intragroup transactions.
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