For WizardKim-DPR2

Week 5 Discussion Post 2nd Response:

Instructions: Respond to the post below from your fellow classmate. Any opinions, or anything you would like to add to discuss about their post. Must be three substantial paragraphs, and three references.

Hello Everyone

 

Noncontrolling interest, sometimes called a minority interest, is the portion of equity in a subsidiary not attributable, directly or indirectly, to a parent. ... When a subsidiary is deconsolidated, any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value .FASB(2020) Sumary of Statement N160

A non-controlling interest, sometimes called a minority interest, is that part of the equity of a subsidiary that is not attributable, directly or indirectly, to a parent. The objective of this Statement is to improve the relevance, comparability and transparency of the financial information that a reporting entity provides in its consolidated financial statements by establishing accounting and reporting standards that require:

• Ownership interests in subsidiaries held by parties other than the parent must be clearly identified, labeled and presented in the consolidated statement of financial position within equity, but separate from the equity of the parent.

 • The amount of consolidated net income attributable to the parent and the non-controlling interest is clearly identified and presented in the consolidated statement of income.

 • Changes in the ownership interest of a parent while the parent retains its controlling financial interest in its subsidiary will be accounted for consistently. A parent's interest in a subsidiary changes if the parent purchases additional ownership interests in its subsidiary or if the parent sells some of its ownership interests in its subsidiary. It also changes whether the subsidiary reacquires some of its ownership interests or the subsidiary issues additional ownership interests. All such transactions are economically similar and this Statement requires that they be accounted for in a similar manner, as equity transactions. FASB (2020) Sumary of Statement N160

Accounting treatment

In accordance with International Financial Reporting Standards, non-controlling interest is reported in accordance with IFRS 5 and is shown at the bottom of the Equity section in the consolidated balance sheet and, subsequently, in the statement of changes in equity net. Under US GAAP, minority interest can be reported in the liabilities section, in the equity section, or, prior to changes to acceptable accounting standards, in the middle section of the balance sheet. The mezzanine section is located between liabilities and equity. FASB FAS 160 and FAS 141r significantly alter the way a parent company accounts for non-controlling interest (NCI) in a subsidiary. It is no longer acceptable to report minority interests in the middle section of the balance sheet. Wikilpedia (2020)

The amounts of consolidated net income attributable to the parent and minority interest must be clearly identified and presented in the consolidated income statement. Previously, net income attributable to non-controlling interest was generally recorded as an expense or other deduction when calculating consolidated net income. Macabacus(2020) Noncontrolling Interest

I agree with this accounting treatment that is established in FASB N160 where it is established that the profit attributable to the controlling company and the minority interest must be clearly identified, it seems to me a correct and fair record of non-controlling interest.

Reference :

FASB (2020) Summary of Statement N160 https://www.fasb.org/summary/stsum160.

 Wikipedia (2020) Minority Interesthttps://es.qwe.wiki/wiki/Minority_interest

Macabacus(2020)NoncontrollingInteresthttps://macabacus.com/accounting/noncontrolling-interest