REALISATION OF PROFITS The consolidated financial statements of Submarine Ltd are being prepared by the group accountant, Raz Putin. He is currently in dispute with the auditors over the need to adjust the NCI share of equity for intragroup transactions. He believes that would be unnecessary. He argues that, as the NCI group of shareholders has an equity interest in the subsidiary, it is entitled to a share of what the subsidiary records as equity, including the profit obtained from all transactions. He also disputes with the auditors the notion of ‘realisation’ of profit in relation to the NCI. If realisation requires the involvement of an external entity in a transaction, then in relation to transactions such as intragroup transfers of vehicles and services or interest payments, the profit will never be realised as those transactions never involve external entities. As a result, the most appropriate accounting is to give the NCI a share of subsidiary equity and not be concerned with the fictitious involvement of external entities. Required Write a report to Raz convincing him that his arguments are fallacious. CASE STUDY