question about Profit from continuing operation in relation to NCI

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sowrudy
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Joined: 22 Feb 2022, 03:26

question about Profit from continuing operation in relation to NCI

Post by sowrudy »

Hi Team

I have a question about the presentation of the group P&L. Appreciate if anyone can help.

On the "Profit/(loss) for the year from continuing operations", I wonder which option is appropriate in line with IFRS 10

Option 1.
The gross net profit (include NCI) is presented on one line, and then we add separate line at the bottom of it for NCI. This way we only subtract the NCI from the "gross net profit" at the high level.

option 2.
For each line in group P&L (Revenues, expenses, etc), is presented Net after deducting NCI. And then we present the total NCI portion again at separate item at the bottom.


Thanks in advance
Sowrudy
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Marek Muc
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Re: question about Profit from continuing operation in relation to NCI

Post by Marek Muc »

Please illustrate your question with numbers
sowrudy
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Joined: 22 Feb 2022, 03:26

Re: question about Profit from continuing operation in relation to NCI

Post by sowrudy »

Hi Mark, thanks for prompt reply, below is what I mean. Before transferring the number, I usually come up with excel template as my working, I wonder which method is more acceptable.

Option 1
Account....Parent.....Subs.....Total
Revenue......120..........12........132
Expense.......-10.......... -1.........-11
Tax................-10..........-1..........-11
Group profit...100........10........110
Minus profit from NCI............... -2
Net profit..................................108

Option 2.
Account....Parent.....Subs....NCI........Total
Revenue.......120........12......-4............128
Expense........-10..........-1.......1............-10
Tax.................-10..........-1......1.............-10
Net profit.......100.........10.... -2 .............108
JRSB
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Re: question about Profit from continuing operation in relation to NCI

Post by JRSB »

there's a fundamental principle that if you control an entity then it's results are consolidated in full, not just your share (then show the amount attributable to NCI later). ie show 100% of all subsidiaries' revenue and expenses in group P&L.
sowrudy
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Joined: 22 Feb 2022, 03:26

Re: question about Profit from continuing operation in relation to NCI

Post by sowrudy »

Thanks JBSB
You indicated that option 1 is more a proper method.

If so, I wondering should the tax be calculated in proportion to parent's share with the subs as it only own (just say) 51% and the tax rate is 10%. If The subs's net profit is $100, then on option 1, the tax displayed on subs tax (colum 3) should be $5.1 or $10?

Because from tax perspective, the Sub is not part of the group (i.e. just say in Australia, it's considered part of the group for tax purpose if it's wholly owned). So apart from consol, subs actually file their own stand alone tax.
Leo
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Re: question about Profit from continuing operation in relation to NCI

Post by Leo »

Neither option 1 not 2 is appropriate, as JRSB said, the P&L should be reflected in full which means you don't split between Parent and NCI at each stage of the P&L but only at the bottom line.
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