In order to consolidate a 60% interest in a subsidiary, the Morgan Group prepared the following pre-acquisition entry: DR Retained earnings $14 000
DR Share capital $25 000
DR General reserve $6 000
CR Investment in subsidiary $45 000
The interest in equity attributable to the direct non-controlling interest is:

Question

Quizplus · Accepted Answer

The total equity of the subsidiary is $45,000 (sum of retained earnings, share capital, and general reserve). The non-controlling interest is 40% (100% - 60% interest held by Morgan Group). Therefore, 40% of $45,000 is $18,000, which is closest to option A, $30,000. However, the correct calculation should be $18,000, indicating a potential error in the options provided.

In Order to Consolidate a 60% Interest in a Subsidiary