Chandra Ltd. acquired 80% shares of Manu Ltd. on 1.9.2023. The following information of Manu Ltd. is made available to you as on 31.3.2024:
a) Share capital: 1,00,000 equity shares of Rs. 10 each.
b) General Reserve as on 1.4.2023: Rs. 90,000
c) Profit and Loss Account balance (credit) as on 1.4.2023: Rs. 42,000
d) Net profit for the year ended 31.3.2024: Rs. 80,000
Calculate Non-controlling Interest.
Answer (1)
To calculate the Non-controlling Interest (NCI) in the financial statements of Manu Ltd., we need to consider the shareholding percentage that Chandra Ltd. does not own, which in this case is 20%.
Here's a step-by-step calculation:
Determine the percentage ownership of non-controlling interest:
Since Chandra Ltd. owns 80% of Manu Ltd., the non-controlling interest is 20%.
Calculate equity-attributable amounts at the beginning of the period:
Share Capital: Manu Ltd. has 1,00,000 equity shares of Rs. 10 each, totaling Rs. 10,00,000.
Therefore, the share capital attributable to the NCI is 20% of Rs. 10,00,000: NCI in Share Capital = 0.20 × 10 , 00 , 000 = 2 , 00 , 000
Calculate reserves attributable to the NCI as at 1.4.2023:
General Reserve: Rs. 90,000
NCI share of General Reserve: NCI in General Reserve = 0.20 × 90 , 000 = 18 , 000
Calculate retained earnings (Profit and loss account) attributable to the NCI as at 1.4.2023:
Profit and Loss Account balance is Rs. 42,000 (credit balance)
NCI share of opening P&L balance: \text{NCI in P&L Account} = 0.20 \times 42,000 = 8,400
Calculate the share of net profit for the year attributable to the NCI:
Net profit for the year ended 31.3.2024 is Rs. 80,000
NCI share of net profit: NCI in Net Profit = 0.20 × 80 , 000 = 16 , 000
Calculate total NCI as of 31.3.2024 by adding all components:
Total NCI Calculation: Total NCI = 2 , 00 , 000 + 18 , 000 + 8 , 400 + 16 , 000 = 2 , 42 , 400
Hence, the Non-controlling Interest to be reported on the balance sheet of Chandra Ltd. for Manu Ltd. as of 31.3.2024 is Rs. 2,42,400.
