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Slides_Chapter4_1 - Chapter Four Consolidated Financial...

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Chapter Four Consolidated Financial Statements and Outside Ownership McGraw-Hill/Irwin
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Noncontrolling Interest If the parent doesn’t own 100% of the company, WHO owns the rest of it? Ø Noncontrolling (Minority) Shareholder Ø The ownership interests of the Noncontrolling Shareholders must be reflected in the consolidated financial statements. 2
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Noncontrolling Interest Ø Noncontrolling Interest (Balance sheet) Ø Noncontrolling Interest in 3 The Parent has control and is responsible for all of the Subsidiary’s assets and liabilities, so we will still consolidate 100% of the Subsidiary’s financial information. However… The existence of noncontrolling investors requires two new accounts :
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Example Assume that Parker Corporation wants to acquire 90% of Strong Company. Strong’s stock has been trading for $60 per share. If Parker has to pay $70 per share to induce enough stockholders to sell, how do we account for the 10% of Strong that Parker does not own? 4
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Slides_Chapter4_1 - Chapter Four Consolidated Financial...

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