Peter Ltd owns 80% of Lauren Ltd.For the year ending 30 June 2011,Lauren Ltd's operating profit after tax is $10 000 which includes unrealised profit on a sale of inventory from Lauren Ltd to Peter Ltd of $2 450 after tax.The NCI share of Lauren Ltd's profit for the year is:

Question

Quizplus · Accepted Answer

The NCI share of Lauren Ltd's profit is calculated based on their share of the net profit after eliminating intra-group transactions. Since Peter Ltd owns 80% of Lauren Ltd, the NCI owns the remaining 20%. The reported profit of Lauren Ltd is $10,000, but this includes an unrealised profit of $2,450 from an intra-group sale, which must be eliminated for consolidation purposes. Therefore, the adjusted profit is $10,000 - $2,450 = $7,550. The NCI's share is 20% of $7,550, which is $1,510.

Peter Ltd Owns 80% of Lauren Ltd