FNST - Expert required please!

The Magician

Ok, here goes. If anyone could help me here, I would gladly appreciate it.

The answer they got was £160,000 and this sort of question usually forms part of a consolidated statement of financial position, but in this case it didn't. It was a small question in a Osbourne book.

The Issued share capital of Brooker limited consists of 500,000 ordinary shares of 50 pence each. The reserves of the company currently total £150,000.

Huhne Plc owns 300,000 ordinary shares in Brooker Limited.

What is the value of the NCI?

Now, I think, That the parent shareholding is 300/500 is 60%, so the NCI holding is 40%.

I also know that to calculate the NCI you take that percentage and multiply it by the share capital and retained earnings, but cannot get £160,000!

I also get confused when the share capital composition is not £1 per share.

I've been doing this a week but hate not knowing how they got to the answer!

Jo Clark

Hello

I think (but may be wrong) that you need to adjust the number of 500,000 ordinary 50p shares to make them £1

Once this is completed the calculation would be:

250,000 (£1 ord. shares) + £150,000 (Reserves) = 400,000

400,000 * 40% = 160,000


Hope this helps.


JC

The Magician

Thanks so much.

I knew that the answer involved 400,000, by dividing 160,000 by 0.40, and in essence working it backwards, but couldn't figure it out!

I'm learning everyday.

Really appreciate that.

thanks again.

Steve Collings

Hi

I don't think you need to turn the issued share cap into £1 shares because the maths work fine using the numbers in the Q (ordinarily you wouldn't have to adjust the composition of the issued share capital). 500,000 shares at 50p per share comes to £250k (as per Jo Clark's post above).

All the best
Steve

Jo Clark

Thanks for clarifying and explaining it better than I did Steve

Steve Collings

Actually, Jo, I thought your explanation was fantastic and so did the OP. Lots of people struggle with NCI's and you summed it up really nicely.

All the best
Steve

The Magician

Thanks guys!