...example? You are the assistant controller of Amalgamated Industries, Inc. (AII). During a recent meeting with your boss, Hope Leslie Overwerkt (the controller), she informed you of the following:
•AII has just acquired 75% of the outstanding common stock of Rising Star Corp. (RSC). Since AII owns a majority of the shares, it will be required to include RSC in its consolidated financial statements.
•This is the first time that AII has acquired less than 100% of another company and since Hope is not current in her understanding of U.S. Generally Accepted Accounting Principles, she has asked you to conduct some research on the handling of the non-controlling interest in RSC in the financial statements, i.e., the 25% of RSC not owned by AII. Please address the following issues in a memorandum to Hope with citations to the applicable authoritative pronouncements:
1.What percentage of RSC’s assets and liabilities will be included on the consolidated balance sheet?
2.At what amount will RSC’s assets and liabilities be reported in the consolidated statements?
3.How will the non-controlling interest (the 25% of RSC not owned by AII) be handled?
4.Where on the balance sheet will AII report the non-controlling interest in RSC? At what amount?
5.How will the non-controlling interest in the income of RSC be handled on the consolidated financial statements?
•AII has just acquired 75% of the outstanding common stock of Rising Star Corp. (RSC). Since AII owns a majority of the shares, it will be required to include RSC in its consolidated financial statements.
•This is the first time that AII has acquired less than 100% of another company and since Hope is not current in her understanding of U.S. Generally Accepted Accounting Principles, she has asked you to conduct some research on the handling of the non-controlling interest in RSC in the financial statements, i.e., the 25% of RSC not owned by AII. Please address the following issues in a memorandum to Hope with citations to the applicable authoritative pronouncements:
1.What percentage of RSC’s assets and liabilities will be included on the consolidated balance sheet?
2.At what amount will RSC’s assets and liabilities be reported in the consolidated statements?
3.How will the non-controlling interest (the 25% of RSC not owned by AII) be handled?
4.Where on the balance sheet will AII report the non-controlling interest in RSC? At what amount?
5.How will the non-controlling interest in the income of RSC be handled on the consolidated financial statements?