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Noncontrolling Interest
Term Paper ID:45709
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Noncontrolling Interest... More...
4 Pages / 900 Words
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MEMODate March To Ron Lennon CFO Norman CompanyFrom Xxxx Yxxxxxx Staff Accountant Normal CompanySubject Reporting Noncontrolling Interest Introduction Pursuant to your request of March the Accounting Standards Codification ASC Web site was search for material relevant to the questions that you posed with respect to the reporting of noncontrolling interest The relevant information was retrieved from the Web site The material has been reviewed and assessed in relation to the noncontrolling interest held by Norman Company in Berry Corporation The answers to
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Conclusion The ASC requirements with respect to reporting and valuing noncontrolling interest are straightforward and fair. The relevant information was retrieved from the Web site. This interpretation implies that such a transaction would be characterized by an absence on duress for either buyer or seller. Financial Reporting of Noncontrolling Interest The consolidate income statement must report net income and comprehensive income that includes total subsidiary income. The consolidated income statement also must identify contributions to subsidiary income that is attributable to the parent and to the noncontrolling interest (ASC 81 -1 -5 ). Introduction Pursuant to your request of March 1 , 2 1 , the Accounting Standards Codification (ASC) Web site was search for material relevant to the questions that you posed with respect to the reporting of noncontrolling interest. There is an obligation on the part of a parent company to fully disclose noncontrolling interest and any income or loss that is attributable to the noncontrolling interest. The fair value of the equity in Barry Corporation, thus, is $5 , , and the fair value of the non controlling interest is $2 , .3. The ASC on which this interpretation is based in considered to be pending, because accounting standards are in a period of transition to a codified standards set. The answers to the questions that you posed (based on the review and assessment of the ASC material) are presented in the following section of this memo.2. References Accounting Standards Codification 8 5-1 -65-1. In the case of the noncontrolling interest in Barry Corporation, the fair value can be imputed from the fair value the controlling equity position held by Norman Company. MEMODate: March 15, 2 1 To: Ron Lennon CFO, Norman CompanyFrom: Xxxx Yxxxxxx Staff Accountant, Normal CompanySubject: Reporting Noncontrolling Interest1. This transaction was sufficiently recent to quality as a fair value determination. Noncontrolling interest is relevant when a parent company owns a majority share, but not the total share, of the equity of a subsidiary company. Defining and Valuing Noncontrolling Interest The term noncontrolling interest refers to the equity of a subsidiary. Accounting Standards Codification 81 -1 -65-1. Accounting Standards Codification 81 -1 -5 . Norman Company acquired a 6 % interest in Barry Corporation on January 1, 2 1 for $3 , . Norman Company has a 6 % controlling interest in Barry Corporation for which it paid $3 , . Specifically, the noncontrolling interest is the proportion of the subsidiary equity account that is independent of the parent company (ASC 81 -1 -2 ). Thus, there would be no noncontrolling interest in a wholly-owned subsidiary. In the case of the Norman Company equity position in Barry Corporation, the noncontrolling interest in Barry Corporation is 4 % of the equity, or $2 , . Accounting Standards Codification 81 -1 -2. The account payable by Norman Company to Barry Corporation ($2,5 ) for services rendered would be eliminated from the consolidated balance sheet.4. At this time, however, the standard on which this interpretation is based is valid. If there are further questions or issues that need to be addressed, the work can be accomplished quickly.5. With respect to the fair value of noncontrolling interest, the general rule is that the fair value of noncontrolling interest is the amount for which it could be bought or sold on the open market (ASC 8 5-1 -65- 1; ASC 81 -1 -65-1). The material has been reviewed and assessed in relation to the noncontrolling interest held by Norman Company in Berry Corporation.
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