Because the Moth Cement Works has a number of subsidiaries, Star Lin is required to prepare a set of consolidated financial statements for the group. She is concerned about the calculation of the NCI share of equity, particularly where there are intragroup transactions. The auditors require that when adjustments are made for intragroup transactions the effects of these transactions on the NCI should also be adjusted for. Star has two concerns. First, why is it necessary to adjust the NCI share of equity for the effects of intragroup transactions? Second, is it necessary to make NCI adjustments in relation to all intragroup transactions?
Required
Prepare a report for Star, explaining these two areas of concern.