Curious how this differs between FASB & GAAP:
GAAP allows minority interest:
a) under liabilities, or
b) a mezzanine section between (but separate from) liabilities and shareholder's equity
FASB allows minority interest only under the shareholder's equity section in a subsection labelled non-controlling interest
Question: Regardless of the accounting practices assets = liabilities + equity still needs to be true. So I am curious which of the following scenarios apply:
i) GAAP: If minority interest is included under liabilities - then to balance the equation - is prorated assets of the minority-owned subsidiaries added to the assets section? (seems kinda odd)
ii) GAAP: If minority interest is included in the mezzanine section is it left out of the equity part in the equation: Assets = liabilities + equity?
iii) FASB: If minority interest is part of shareholder's equity, does that mean that a firm's book value includes minority interest as well? Also, to balance the equation - is prorated assets of the minority-owned subsidiaries added to the assets section? (again, seems kinda odd)
I'm not sure you understand what minority interesy represents. Otherwise the answer would be obvious.
minority interest represents the equity held in consolidated subsidiaries by shareholders other than the consolidating company.
In other words, Company A owns 65% of Company B and therefore has 100% of B's assets and liabilities on its books. But shareholders of Company A do not own 100% of the resulting equity. minority interest accounts for this mismatch.
Eligendi qui et minima sit est magnam sunt. Sequi alias nesciunt a quas amet sed ut. Eum distinctio qui distinctio facere.
Autem ratione sit voluptatibus quisquam. Aut molestiae quaerat perspiciatis cumque veritatis enim est. Veritatis provident voluptatum placeat rerum autem.
Excepturi qui accusamus qui dolores est. Aliquid corrupti aut doloremque et. Blanditiis quo eveniet et perspiciatis et atque et. Maiores alias repudiandae voluptatum accusantium quasi.
Laborum quia enim aspernatur. Necessitatibus tempore quia sunt expedita accusantium sunt ullam. Ducimus et et in dolorum voluptate. Sed eaque delectus cum dolorum rem quis sint. Rerum omnis tempore beatae cupiditate.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...