Ask Experts Questions for FREE Help !
Ask
    Newgirl2012's Avatar
    Newgirl2012 Posts: 1, Reputation: 1
    New Member
     
    #1

    Mar 5, 2013, 08:55 PM
    Company Accounting: Adjustment for the NCI share of equity
    The consolidated financial statements of Whale Submarine Works Ltd are being prepared by the group accountant, Raz. He is currently in dispute with the auditors over the need to adjust for the NCI share of equity in relation to intragroup transactions. He understands the need to adjust for the effects of the intragroup transactions, but believes that it is unnecessary to adjust for the NCI share of equity. He argues that the NCI group of shareholders has its interest in the subsidiary and as a result is entitled to a share of what the subsidiary records as equity. He also disputes with the auditors about the notion of " realisation" of profit in relation to the NCI. If realisation requires the involvement of an external entity in a transaction, then in relation to transactions such as intragroup transfers of vehicles and services such as interest payments, there is never any external party involved. Those transactions are totally within the group and never involve external entities. As a result, the more appropriate accounting is to give the NCI a share of subsidiary equity and not be concerned with the fictitious involvement of external entities.

    Required: Write a report to Raz convincing him that his argument is fallacious.

Check out some similar questions!

Advanced Accounting NCI balance sheet calculation required [ 2 Answers ]

17. On January 1, 20X1, Payne Corp. purchased 70% of Shayne Corp.'s $10 par common stock for $900,000. On this date, the carrying amount of Shayne's net assets was $1,000,000. The fair values of Shayne's identifiable assets and liabilities were the same as their carrying amounts except for plant...

Accounting: allocation of dividends between preference share and ordinary share [ 0 Answers ]

ALLOCATION OF DIVIDENDS BETWEEN PREFERENCE SHARE AND ORDINARY SHARE The shareholder's equity accounts of Lucky Corporation on Dec. 31, 2012 are as follows: 10% Preference share capital,5000 shares, 50 par 250000 Ordinary share, 100 par 500000 Additional paid...

The company stock is selling for 20 per share the company had total earnings of 40000 [ 1 Answers ]

Problem 18-21 Stock dividend and its effect LO4 Ace Products sells marked playing cards to blackjack dealers. It has not paid a dividend in many years, but is currently contemplating some kind of dividend. The capital accounts for the firm are as follows: Common stock (2,000,000 shares...

Share Equity [ 1 Answers ]

Why company reports othercomprehensive income in shares equity, instead of reporting in the income statement?


View more questions Search
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.