Question

If a company is a wholly owned subsidiary is there any NCI, if so how do you find it?

Answer 1

ANSWER-

DEFINATION OF WHOLLY-OWNED SUBSIDIARY-

First of all we have to understand i.e. A wholly owned subsidiary that operates as an independent legal entity and whose stock is 100% owned by a holding/parent company by way of acquistion or any other manner.

Thus, Because the parent company owns all the shares of a wholly owned subsidiary, there are no minority shareholders or no controlling interest (NCI).

A popular Example of a wholly owned subsidiary system is Volkswagen AG, which wholly owns Volkswagen Group of America, Inc. and its distinguished brands: Audi, Bentley, Bugatti, Lamborghini (wholly owned by Audi AG), and Volkswagen.

In other way- NCI for understanding purpose is the share of equity ownership in a subsidiary’s equity that is not owned or controlled by the parent corporation. The parent company has a controlling interest of 50 to less than 100 percent in the subsidiary and reports financial results of the subsidiary consolidated with its own financial statements.

# Two Methods to find out NCI in following situtions;-

A) The cost method, where the parent owns 20 percent or less in subsidiary’s voting stock.

B) And, the equity method, where the percentage of ownership is 21–49 percent.