With reference to IFRS, discuss the treatment of non-controlling interests where: 1.2 The parent company pays...

With reference to IFRS, discuss the treatment of non-controlling interests where:

1.2 The parent company pays a premium of acquisition of 90% of the subsidiary due to plant being undervalued in the subsidiary's books.

Q2. The subsidiary sells goods at a profit to the parent company which owns 75% of the subsidiary's shares.

Expert Solution

1. At the point when the parent company pays a premium of acquisition of 90% of the subsidiary, generosity be perceived in the united monetary record by the parent. There will be no adjustment in the estimation of non-controlling enthusiasm by such activity of the parent organization. The non-controlling interest will be appeared to the balance sheet as reasonable worth or in the portion of net recognizable resources as in the past.

2. At the point when the subsidiary has offered merchandise to parents, it must have earned a profit on such goods. On the off chance that the parent company has such products in the stock then it should take out the unrealized benefit on the end stock of the parent.

For this reason, 2 segments of the unrealized benefit on finishing stock will be determined.

25% of such unrealized benefit will be decreased from the Noncontrolling interest and

75% of such unrealized benefits will be diminished from the solidified benefit of the parent.

ekkarill92 answered 1 year ago

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