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Asked by Jill Colleen Argame on Jun 07, 2024

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The consolidation technique of NCI allocation is based on the proposition that non-controlling shareholders have an ownership interest in group equity.

Non-controlling Shareholders

Shareholders who own shares in a company but do not have sufficient voting power to influence the company's policies or decisions.

Ownership Interest

The proportion of shares or stake an individual or entity holds in a company, granting them rights and influence over the company.

Group Equity

The collective interest of all shareholders in the total equity of a conglomerate or group of companies under common control.

  • Digest the concept of non-controlling interest (NCI) and its inclusion in consolidated financial records.
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Autumn LarsenJun 11, 2024
Final Answer :
True
Explanation :
The consolidation technique of NCI allocation assumes that non-controlling shareholders have an ownership interest in the group equity, which is why it is necessary to allocate a portion of the consolidated net income and assets to them. This is based on the principle of economic substance over legal form, where the actual economic reality of the investment is more important than its legal structure.

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