parent a has an 80 interest in subsidiary b which it acquired in 2000 at 31 december 611721

Accounting for the non-controlling interests share of losses previously allocated to the parent

Parent A has an 80% interest in subsidiary B, which it acquired in 2000. At 31 December 2009, the subsidiary had net negative equity of $100, therefore, the carrying amount of the non-controlling interest at that date was $nil. Under IAS 27 (2007), the deficit of $20 attributable to the non-controlling interest was allocated to parent A. The parent adopts IAS 27 (2008) on 1 January 2010.

Consider the accounting in each of the following independent scenarios:

• In the year ended 31 December 2010, subsidiary B earns profits of $150 Parent As share of the profits is $120 (i.e. 80% of $150) and the non-controlling interests share of the profits is $30 (i.e. 20% of $150).
• On 1 January 2010, parent A pays $5 to acquire half of the 20% interest held by the non-controlling interest The non-controlling interests existing interest is $nil and non-controlling interest is reduced by $nil (i.e. 10%/20% × $nil).

On 1 January 2010, parent A sells a 10% interest in subsidiary B for $5, i.e. its interest in subsidiary B is reduced from 80% to 70% The parents existing interest is minus $100 and non-controlling interest takes up minus $12.5 (i.e. 10%/80% × minus $100).