The deficit balance of non-controlling interests

Learning objectives

• Calculate the share of losses attributed to non-controlling interests even when this results in a deficit balance.L2, L3
• Explain why the deficit balance is not capped at zero.L3

Normative references

• IFRS 10 §B94The entity attributes profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests; it also attributes total comprehensive income to them even if this results in the non-controlling interests having a deficit balance. The basis of allocation (existing ownership interests, generally without taking potential voting rights into account) is specified in B89 and B90.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

3 questions

• Tilleul SA, a subsidiary of the Orme group, records a loss of {subsidiary_loss} for the year. Third parties hold {nci_pct} of Tilleul, and the carrying amount of their non-controlling interests is {opening_nci} at the start of the year. Case convention: no dividend and no other comprehensive income; a negative balance is shown with a minus sign. Calculate the closing balance of the non-controlling interests.L3
• Fresne SA, a subsidiary of the Orme group, records a loss of {subsidiary_loss}. Third parties hold {nci_pct} of Fresne. Case convention: the attribution is recorded in the consolidation work, and the balance of the non-controlling interests may become a deficit. Record the entry that attributes to the non-controlling interests their share of the loss.L3
• Pin SA records a loss of 100,000. Third parties hold 20% of Pin, and their non-controlling interests stand at 12,000 before this loss. Case convention: no dividend and no other comprehensive income. How do third parties bear their share of the loss?L2