What is a good response to? A shareholder has a non-controlling interest in a company if the shareholder does not own enough equity in the company to shape decision-making at the firm (Hayes, 2024; “Non-controlling”, 2024). In order to determine the shareholder’s non-controlling interest balance in a company at the start of the period, the accountant first calculates the fair value of the non-controlling interest. Next, the employee calculates the change in the company’s retained earnings that is proportional to the non-controlling interest (Hoyle et al., 2024). The accountant adds this number to the fair value of the non-controlling interest. Then, the employee subtracts the excess fair value amortizations that are proportional to the non-controlling interest from the aforementioned amount (Hoyle et al., 2024). The result is the non-controlling interest balance at the start of the period. To calculate the non-controlling interest balance at the end of the period, the accountant adds the net income proportional to the non-controlling interest to the non-controlling interest balance at the beginning of the period (Hoyle et al., 2024). Finally, the employee subtracts the dividends proportional to the non-controlling interest from the aforementioned sum. This final balance is the non-controlling income amount at the end of the period (Hoyle et al., 2024).

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A shareholder has a non-controlling interest in a company if the shareholder does not own enough equity in the company to shape decision-making at the firm (Hayes, 2024; “Non-controlling”, 2024). In order to determine the shareholder’s non-controlling interest balance in a company at the start of the period, the accountant first calculates the fair value of the non-controlling interest. Next, the employee calculates the change in the company’s retained earnings that is proportional to the non-controlling interest (Hoyle et al., 2024). The accountant adds this number to the fair value of the non-controlling interest. Then, the employee subtracts the excess fair value amortizations that are proportional to the non-controlling interest from the aforementioned amount (Hoyle et al., 2024). The result is the non-controlling interest balance at the start of the period. To calculate the non-controlling interest balance at the end of the period, the accountant adds the net income proportional to the non-controlling interest to the non-controlling interest balance at the beginning of the period (Hoyle et al., 2024). Finally, the employee subtracts the dividends proportional to the non-controlling interest from the aforementioned sum. This final balance is the non-controlling income amount at the end of the period (Hoyle et al., 2024).

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