The calculation of notional profits of entities with cross holdings is required to:
A) determine the parent ownership interest in the subsidiaries
B) determine the NCI ownership interest in the subsidiaries
C) determine both the parent and NCI ownership interests in the subsidiaries
D) none of the above

Question

Quizplus · Accepted Answer

The calculation of notional profits of entities with cross holdings is required to determine both the parent and NCI ownership interests in the subsidiaries. This is because notional profits are the hypothetical profits allocated to the parent and the NCI in the absence of cross holdings. Therefore, by calculating notional profits, both the parent and NCI ownership interests can be determined accurately.

The Calculation of Notional Profits of Entities with Cross Holdings