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Saturday, November 16, 2013

PPT On Non Controlling Interest


Non Controlling Interest Presentation Transcript:
1.Non-controlling Interest

2.For the parent to consolidate the subsidiary,  only a controlling interest is needed—not 100% interest.
Noncontrolling interest or minority interest refers to the claim of these shareholders on the income and net assets of the subsidiary.

3.Noncontrolling Interest Computation of income to the noncontrolling interest: In uncomplicated situations, it is a simple proportionate share of the subsidiary’s net income.
Presentation: FASB 160 requires that the term “consolidated net income” be applied to the income available to all stockholders.

4.The noncontrolling interest’s claim on the net assets of the subsidiary was previously shown between liabilities and stockholders’ equity in the consolidated balance sheet.
Some firms reported minority interest as a liability, although it did not meet the definition of a liability.

5.Combined Financial Statements
Financial statements are also prepared for a group of companies when no one company in the group owns a majority of the common stock of any other company in the group.

6.Entity Theory
Focuses on the firm as a separate economic entity, rather than on the ownership rights of the shareholders.
Emphasis is on the consolidated entity itself, with the controlling and noncontrolling shareholders viewed as two separate groups, each having an equity in the consolidated entity.

7.All of the assets, liabilities, revenues, and expenses of a less-than-wholly owned subsidiary are included in the consolidated financial statements, with no special treatment accorded either the controlling or noncontrolling interest.

8.Current Practice
FASB 141R has significantly changed the preparation of consolidated financial statements subsequent to the acquisition of less-than-wholly owned subsidiaries.

9.Current approach clearly follows the entity theory with minor modifications aimed at the practical reality that consolidated financial statements are used primarily by those having a long-run interest in the parent company.

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