For a transaction to require an adjustment to the calculation of a non-controlling interest share of equity it must have the following characteristics:
I. The transaction must result in the subsidiary recording a profit or a loss.
II. After the transaction the other party to the transaction must have on hand an asset on which unrealised profit is accrued.
III. The initial consolidation adjustment must affect both the statement of financial position and statement of comprehensive income.
A) I and II only;
B) I, II and III;
C) II and III only;
D) None of the above.

Question

Quizplus · Accepted Answer

All three characteristics must be present for a transaction to require an adjustment to the calculation of a non-controlling interest share of equity. The presence of a profit or loss in the subsidiary (characteristic I) alone is not sufficient. The other party to the transaction must have a related unrealized profit (characteristic II) and the initial consolidation adjustment must affect both the statement of financial position and statement of comprehensive income (characteristic III) for the adjustment to be necessary. Therefore, options A, C, and D are incorrect.

For a Transaction to Require an Adjustment to the Calculation