"Consolidated Financial Statements – Intra-Entity Asset Transactions"Suggest one (1) method of accounting for the income effects on the non-controlling interest that you consider most appropriate. Provide a rationale for your response.
Thank you for the opportunity to help you with your question!
The method of accounting for the income effects
on the non-controlling interest that I consider most appropriate is the Equity
This is because the
accounting for non controlling interests is built upon economic entity concept of consolidated financial statements.
As per the economic entity
concept, all residual interest holders in a business possess an equity interest
in the consolidated business. This applies even if the concerned stakeholders
have a residual interest in a subsidiary of a parent company. Hence, a non
controlling interest is displayed in the consolidated financial statement as a
separate part of equity.
Similarly the controlling
and noncontrolling interests are separately shown on the consolidated
comprehensive income statement.
Please let me know if you need any clarification. I'm always happy to answer your questions.
Aug 1st, 2015
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