(Gain) Exception for NCI: This exception is for a situation where the NCI value exceeds its share of fair value of net assets, excluding goodwill.
Enter new Value for D3. Then calculate and enter values for C6 and D6. B6 is sum of C6 and D6.
The entry to distribute the excess on the worksheet would be as follows:
The parent must bring to fair value any assets, other than cash, that it exchanges for the controlling interest. If those assets are retained and used by the subsidiary company, the gain must be eliminated in the consolidation process.
Assets transferred would be retained by the subsidiary when either:
1. The assets are transferred to the former shareholders of the subsidiary company and the shareholders sell the assets to the subsidiary company, or
2. The assets are transferred directly to the subsidiary company in exchange for newly issued shares or treasury shares.
The gain would be deferred using the procedures demonstrated in Chapter 4 for the parent sale of a fixed asset to the subsidiary.