In this session we shall look at how the “Other Comprehensive Income” section of the Consolidated Statement of Profit or Loss and Other Comprehensive Income is prepared where there have been gains made on revaluations in the period.
Gains and losses on revaluation
To calculate the gain on revaluations made by a group we add up the individual gains made by the parent and subsidiary. The process is the same where a loss on revaluation is recorded. These gains or losses will then be recorded in the group’s “other comprehensive income.”
To calculate the non-controlling interest you should first calculate the non-controlling interest’s share of profits for the period and then add the non-controlling interest’s share of the gain on revaluation (or deduct their share of the loss on revaluation).
Illustration
Hestia Ltd owns 70% of the share capital of Core Ltd. The companies has not made any transactions with each other during the year ended 31/12/2018 but both have revalued the value of their land during the year.
The profit for the year would be calculated as follows:
To calculate the gains on revaluation we will simply add the parent and subsidiary’s gain. Once this is done we can calculate the total comprehensive income and start to calculate how this will be split between the equity holders of the parent and the non-controlling interests.
Non-controlling interests will be calculated by first working out the non-controlling interest on the subsidiary’s profit for the year as detailed in session 6.07. We will then calculate the non-controlling interest’s share of the subsidiary’s gain on revaluation by multiplying the subsidiary’s gain by the portion of the subsidiary not owned by the parent.
The non-controlling interest can now be entered in the statement.
The total comprehensive income attributable to the equity holders of the parent will be calculated as the total comprehensive income of the group less the amount we have calculated as being attributable to the non-controlling interests.
The statement is now complete.
Question
A parent owns 80% of the shares in its subsidiary. During its most recent financial period, the parent and subsidiary made profits for the period of £220,900 and £46,200 respectively and the subsidiary also made a surplus on revaluation of £83,500.
Given just this information calculate:
a) The total comprehensive income for the period
b) The amount of total comprehensive income attributable to non-controlling interests
c) The amount of total comprehensive income attributable to equity holders of the parent
Click here to reveal the answer
a) Total comprehensive income:
- Profit for the period: £220,900 + £46,200 = £267,100
- Other comprehensive income: £83,500
- Total comprehensive income: £267,100 + £83,500 = £350,600
b) Total comprehensive income attributable to non-controlling interests
- Share of subsidiary not owned by parent: 100% – 80% = 20%
- NCI share of profits: 20% x £46,200 = £9,240
- NCI sharer of other comprehensive income: 20% x £83,500 = £16,700
- NCI share of total comprehensive income: £9,240 + £16,700 = £25,940
c) Total comprehensive income attributable to equity holders of the parent
- Total comprehensive income: £350,600
- Attributable to NCI: £25,940
- Attributable to equity holders of the parent: £350,600 – £25,940 = £324,660
