Non controlling interest - HELP!?

milly1998

Please could someone explain how the non-controlling interest at acquisition is 4,000?
And all the following figures after? I cannot seem to link them back to the original statements.
Any help with this would be much appreciated.

CMP1969

Hi milly1998

The best way to look at this is to 1st think about what Share Capital, Share Premium and Retained Earnings B Ltd had on day it was acquired by A Ltd.

1. Date of Acquisition is 01/01/20x4 and A Ltd Acquired 80% holding i.e. 8,000/10,000 share = 80%.
2. If A Ltd's share in B Ltd is 80% therefore Non-Controlling Interest is 20% (100%-80%)
3. At Acquisition B Ltd had following Equity;
Share Capital - 10,000 of which 20% is NCI = 10,000 x 20% is £2,00
Retained Earnings - 10,000 of which 20% is NCI = 10,000 x 20% is £2,00
Total is therefore £2,000+£2,000 = £4,000 (Note this is only Non-Controlling Interest at Acquisition)


Hope this helps