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Under Ind AS 101, an entity's opening Ind AS balance sheet shows a DEFICIT NCI balance that did NOT exist under previous GAAP. This deficit can arise on transition from:
ARetrospective allocation of historical losses to NCI under Ind AS 110, with no other condition
BRemeasurement of the assets/liabilities of the subsidiary as part of Ind AS transition — NOT from retrospective allocation of accumulated losses to NCI (which is prohibited unless the entity restates past business combinations)
CA misclassification correction in NCI from previous GAAP
DA general policy choice to test the NCI movement under Ind AS 110
Answer & Solution
Correct answer: B. Remeasurement of the assets/liabilities of the subsidiary as part of Ind AS transition — NOT from retrospective allocation of accumulated losses to NCI (which is prohibited unless the entity restates past business combinations)
Mandatory exception — Ind AS 101 prohibits retrospective allocation of accumulated profits between owners and NCI on transition (unless the entity elects to restate past business combinations under Ind AS 103). The NCI deficit can ONLY arise from remeasurement of the subsidiary's net assets on transition (e.g., property revalued downward; provisions recognised newly). The prohibition prevents distorting the NCI position with hindsight.
Related questions
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