Consolidated Financial Statements and Non-Controlling Interests 2

Consolidated Financial Statements and Non-Controlling Interests 2

Net income or loss and each component of other comprehensive income must be attributed to the controlling and noncontrolling interests based on their relative ownership interests. If a contractual arrangement specifies some other attribution arrangement, then those elements of comprehensive income would be attributed in that manner.

If losses attributable to the controlling and noncontrolling interests in a consolidated subsidiary exceed their interests in the subsidiary, additional losses will continue to be attributed to those interests, even if the noncontrolling interest's share of those losses exceeds the equity attributable to the noncontrolling interest.

Once a parent has obtained control of a subsidiary, changes in ownership interests in that subsidiary that do not affect control are accounted for as equity transactions, and, therefore, no gain or loss is recognized in the consolidated income statement. When such a change in ownership occurs, the carrying amount of the noncontrolling interest is adjusted to reflect its new ownership level, and any difference between the adjustment and the fair value of the consideration paid or received is recognized in equity. The change has no effect on consolidated net income or on the numerator in the calculation of consolidated earnings per share.

If there is a change in the relative ownership interests of the controlling and noncontrolling interests in a subsidiary for which goodwill has been recognized at the date of acquisition, the goodwill must be reattributed to the controlling and noncontrolling interests based on the relative carrying amounts of the goodwill previously allocated to them. The original allocation of goodwill may not necessarily have been in the ownership ratio when allocated at acquisition in accordance with SFAS No. 141R.

If control of a subsidiary is lost by any means (e.g., sale, contractual agreement), a gain or loss is recognized in consolidated net income as the difference between the following two items (para. 27):

a. The aggregate of (1) the fair value of the proceeds, if any, from the transaction that resulted in the loss of control and (2) the fair value of any retained investment in the former subsidiary at the date control is lost.

b. The parent's interest in the former subsidiary's net assets at the date control is lost.

If the subsidiary is partially owned at the time the parent loses control, the noncontrolling interest's share of the carrying amount of the subsidiary's net assets is derecognized against the carrying amount of the noncontrolling interest. No gain or loss is recognized with respect to the noncontrolling interest.

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