Consolidation less than 100%

Question 1

How does the noncontrolling interests in a subsidiary’s income/loss and assets/liabilities get reported in consolidated financial statements?

Answer 1

Noncontrolling interest in a subsidiary’s net income or net loss gets reported as a separate line item in the consolidated income statement; the consolidated income/loss is allocated between the parent and the noncontrolling interest.
Noncontrolling interest in a subsidiary’s assets and liabilities gets reported as a separate line item in shareholders’ equity in the consolidated balance sheet

Question 2

When a parent uses the equity method to carry on its books an investment in a subsidiary that it will consolidate, what entries does the parent make on its books related to the subsidiary?

Answer 2

Adjusts on its books the carrying value of its investment in the subsidiary to reflect:

1. )The parent’s share of the subsidiary’s income or loss;
2. )The parent’s share of dividends declared by the subsidiary;
3. )The amortization/depreciation of the difference between the FMV of identifiable assets (but not Goodwill) and the book value of those assets

Question 3

What is the effect on consolidated values when the fair values of a subsidiary’s identifiable assets are less than the subsidiary’s book values for those assets at the date of a business combination?

Answer 3

On the consolidating worksheet:

1. )The identifiable assets are written down to fair value at the date of the business combination;
2. )Any depreciation/amortization expense on those assets taken by the subsidiary will be reduced on the consolidating worksheet to an amount based on the lower fair values.

Question 4

When eliminating an “Investment in Sub” account, which balance is eliminated?

Answer 4

The beginning balance in the investment account. CY activity is not eliminated through an “Investment in” elimination