Please help with Accounting question. Thanks

Accounting
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"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.

Aug 1st, 2015

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 method.

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.


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Aug 1st, 2015

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