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In Reading a Set of Consolidated Financial Statements You Are

question 17

Essay

In reading a set of consolidated financial statements you are surprised to see the term noncontrolling interest not reported under the Liability section of the Balance Sheet.
Required:
a.What is a noncontrolling interest?
b.Why must it be reported in the financial statements as an element of equity rather than a liability?


Definitions:

Person's Judgment

The capacity or ability of an individual to make considered decisions or come to sensible conclusions.

Bound in Contract

A legal state or condition wherein parties are legally obligated to fulfill the terms and conditions stipulated in a contract.

Non Est Factum

A legal defense in contract law where a person claims that a signature on a contract was signed by mistake, without understanding its nature.

Functionally Illiterate

Describes an individual whose reading and writing skills are inadequate to manage daily living and employment tasks that require literacy.

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