James Limited is a subsidiary of Anastasia Limited. When Anastasia acquired its 75% interest in James, the retained earnings of James were $10 000. At the beginning of the current period James Limited's retained earnings were $40 000. James earned profit after tax of $20 000 during the current period. The total share of the non-controlling interest in the equity of James Limited at the end of the current period is:
A) $7 500
B) $10 000
C) $15 000
D) $17 500

Question

Quizplus · Accepted Answer

Since Anastasia owns a 75% interest in James Limited, the non-controlling interest (NCI) owns the remaining 25%. 
At the beginning of the current period, the total retained earnings of James were $40 000, of which 25% belongs to the NCI, which is $10 000. 
James earned a profit of $20 000 during the current period, of which 25% belongs to the NCI, which is $5 000. 
Therefore, the total share of the NCI in the equity of James Limited at the end of the current period is $10 000 (from retained earnings) + $5 000 (from current year profit) = $15 000 (Option C).

James Limited Is a Subsidiary of Anastasia Limited