A current year transfer by a partly owned subsidiary of a pre-acquisition balance from the general reserve to retained earnings is ignored when preparing the NCI journals as there has been no change in total equity.

Question

Quizplus · Accepted Answer

When preparing NCI (Non-Controlling Interest) journals, a transfer by a partly owned subsidiary from the general reserve to retained earnings affects the allocation of profits between the parent and the non-controlling interests, even though there has been no change in total equity. This is because the transfer can change the proportion of profits attributable to the parent and the NCI, based on their respective ownership percentages in the subsidiary.

A Current Year Transfer by a Partly Owned Subsidiary of a Pre-Acquisition