Chapter 5, Problem 5.1Q

Where is the balance assigned to the non-controlling interest reported in the consolidated balancesheet?

To determine

Consolidation:

Consolidation is the process of combining the financial statement of the parent company and its subsidiaries.

To Indicate: The presentation of non-controlling interest in the consolidated balance sheet.

Explanation of Solution

A consolidated balance sheet shows the combined balances of the parent company and its subsidiaries. On the balance sheet of the parent company, all the assets of the subsidiary are added with the assets of the parent company. In case of a non-controlling stake, a separate item “non-controlling” interest is reported on the balance sheet of the parent company.

The non-controlling interest represents the share of the equity held by other than the parent company. The non-controlling interest is shown as a part of the stockholder’s equity on the consolidated balance sheet.