For an Intragroup Transaction to Require an Adjustment to the Calculation

question 23

Multiple Choice

For an intragroup transaction to require an adjustment to the calculation of the non-controlling interest share of equity it must have which of the following characteristics?
I. The transaction must result in the subsidiary recording a profit or a loss.
II. After the transaction, the other party (not the party holding the non-controlling interest) must have on hand an asset on which unrealised profit is accrued.
III. The initial consolidation adjustment must affect both the statement of financial position and statement of comprehensive income.

• A) I and II only.
• B) II and III only.
• C) I, II and III.
• D) None of the above.

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Definitions:

Mutually Beneficial Exchanges

Transactions that provide advantages or gains to all parties involved.

Comparative Advantage

The competence of a person, business, or nation to manufacture a product or provide a service with a lesser opportunity cost compared to rivals.

Middlemen

Intermediaries in the distribution process that facilitate trade between producers and consumers by buying and selling products, often adding value in the process.