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Financial reporting developments
A comprehensive guide

Consolidated and other financial statements
Revised November 2013

Noncontrolling interests, combined financial statements, parent company financial statements and consolidating financial statements

To our clients and other friends
This Financial reporting developments (FRD) publication is primarily designed to help you understand financial reporting issues related to the accounting for noncontrolling interests. This publication also includes interpretive guidance on consolidation procedure and on the presentation of combined, parentonly, and consolidating financial statements. The publication reflects our current understanding of the relevant guidance in these areas, based on our experience with financial statement preparers and related discussions with the FASB and SEC staffs. The accounting for noncontrolling interests is based on the economic entity concept of consolidated financial statements. Under the economic entity concept, all residual economic interest holders in an entity have an equity interest in the consolidated entity, even if the residual interest is relative to only a portion of the entity (that is, a residual interest in a subsidiary). Therefore, a noncontrolling interest is required to be displayed in the consolidated statement of financial position as a separate component of equity. Likewise, the consolidated net income or loss and comprehensive income or loss attributable to both controlling and noncontrolling interests is separately presented on the consolidated statement of comprehensive income. Consistent with the economic entity concept, after control is obtained, increases or decreases in ownership interests that do not result in a loss of control should be accounted for as equity transactions. However, changes in ownership interests that result in a loss of control of a…...

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