Transcription
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So we've gone up the stairs. Let's go down the stairs. So we're now up in the realms of control and we decide to sell some shares. But we don't sell enough to cross the accounting boundary. We sell some shares and we're still able to control the subsidiary. So again, what we've got is a change in ownership, okay? And what happens there is that if we sell shares, our ownership interest decreases, doesn't it? And if there's a decrease in the ownership, there is then an increase in the non-controlling interest. And the importance aspect here is that again, your non-controlling interest will increase. We receive cash, so we debit the bank, we credit the NCI, and then the balancing figure then is your other components of equity.
But the key difference here is that if you're increasing the non-controlling interest, you're not giving them more of their already owned non-controlling interests. You're giving them more of the assets, more of the liabilities, and more of the goodwill. So when you look at the change in ownership as a percentage, we don't apply it to the non-controlling interest. We actually apply it to the assets, the liabilities, and the goodwill because that's what we're giving them more of, isn't it?
Okay, so let's go through and see it a little bit in more detail with the example. It wants us to prepare the journal entry to record the change in ownership from a 90 percent holding to a 2008 70 percent holding. So what you've got there is that we had 90. We're now going there down to 70 because we've disposed of a 20% holding. So we had 10% NCI. We now have a 30% non-interest. So the non-controlling interest own 20% more of the assets and liabilities and 20% more of the goodwill, okay?
So what we've got there is in order to work out the change in ownership, we need to work out what the assets and liabilities are, what the goodwill is, and apply that 20% to it. So it says Betio 90% of the equity shares a penny before it then sold 20% of the sub on December for 90 million. So we're going to debit the bank first of all with 90 million. Let's get the easy bits first, shall we? So we debit the bank with 90 million. That's nice and straightforward. The net asset to the day to disposal of the shirt is 350 million and the goodwill was 50 million.
So what we've got there is we need to go through and credit the non-controlling interest. That non-controlling interest is there, is it? As 20% that is increased. And we increase it by 20% of the value of the subsidiary. So that's incorporating the net asset and the goodwill. So the net assets were 350, the goodwill is there as 50. So 20% is it of 400? Those that gave me the 80 million. And then the remaining credit to your other components of equity is there, is it? As 10 million, okay?
So you're crediting your NCI. You're increasing the NCI. Effectively, that's going to be through working number 4, isn't it? Okay? And then you credit your other components of equity. Again, not increasing your other components of equity through whatever working you have used for other components, but usually it goes straight after the group would say learning. So into working number six, okay? Again, where does that credit of ten come from? It is a balancing figure, okay? There's nothing to stop it being a debit figure if the amount that we have received is less than the increase to the non-controlling interest. So here, the increase in the NCI was eighty. If we'd only received fifty in terms of cash, then the balancing figure will be a debit. And I think that debit will be there as thirty million, okay?
So that's going through there and looking at if you are disposing of shares. But when you dispose of shares, you had control and you still have control.