Which of the following statements is correct?
A) The entry to reflect the NCI share of equity at acquisition date changes every year that consolidated financial statements are prepared.
B) The NCI is entitled to a share of consolidated equity.
C) To calculate the NCI share of equity, the subsidiary's equity at the end of the reporting period is divided into five parts.
D) The NCI is not entitled to a share of consolidated equity.

Question

Quizplus · Accepted Answer

The NCI is entitled to a share of consolidated equity. This is because the NCI represents the portion of a subsidiary's equity that is not owned by the parent company. Therefore, the NCI's share of equity is included in the consolidated financial statements to reflect its ownership interest in the subsidiary. Option A is incorrect because the entry to reflect the NCI share of equity is made only once, at the time of acquisition. Option C is incorrect because there is no fixed formula for calculating the NCI share of equity; it depends on the ownership structure of each subsidiary. Option D is incorrect because as stated above, the NCI is entitled to a share of consolidated equity.

Which of the Following Statements Is Correct