Which of the following statements is correct?
A) All intragroup transactions have an impact on the NCI share of equity.
B) Transactions that do not affect profit will not give rise to an adjustment to the NCI.
C) When the parent entity sells inventories to its subsidiary, a consolidation adjustment needs to be recorded to reduce the NCI.
D) The NCI is not entitled to share the group's profit.

Question

Quizplus · Accepted Answer

Transactions that do not affect profit will not give rise to an adjustment to the NCI. The NCI share of equity is adjusted for intragroup transactions that impact profits or dividends. When the parent entity sells inventories to its subsidiary, a consolidation adjustment needs to be recorded to increase the NCI, not reduce it. The NCI is entitled to its share of the group's profit.

Which of the Following Statements Is Correct