S8-6
(Learning Objective 4: Explain goodwill and minority interest) Two accounts that arise from consolidation accounting are goodwill and noncontrolling interest.
1. What is goodwill, and how does it arise? Which company reports goodwill, the parent or the subsidiary? Where is goodwill reported?
2. What is noncontrolling interest, and which company reports it, the parent or the subsidiary? Where is noncontrolling interest reported?
Solution
a. The Goodwill refers to the Intangible asset, this basically arises when one Company acquires the another Company on premium, the goodwill value arises out of the firm client base, employee relation and Company\'s brand name.
The Goodwill is reported in the Balance sheet at the asset side side and is reported by the holding Company, since they consolidate the accounts of all the subsidiary Companies, hence they consolidate the assets size of all the subsidiary Companies.
b. The Non controlling interest refers to the minority interest, wherein parent Company holds few of the shares but the impact of that ownership is not very much significant to have a impact over the decisions of the Company.
The Non Controlling interest is reported by the parent Company at the Assets side as it is a investment by the parent Company, while preparing consolidated statements.
.
S8-6 (Learning Objective 4- Explain goodwill and minority interest) Tw.docx
1. S8-6
(Learning Objective 4: Explain goodwill and minority interest) Two accounts that arise from
consolidation accounting are goodwill and noncontrolling interest.
1. What is goodwill, and how does it arise? Which company reports goodwill, the parent or the
subsidiary? Where is goodwill reported?
2. What is noncontrolling interest, and which company reports it, the parent or the subsidiary?
Where is noncontrolling interest reported?
Solution
a. The Goodwill refers to the Intangible asset, this basically arises when one Company acquires
the another Company on premium, the goodwill value arises out of the firm client base,
employee relation and Company's brand name.
The Goodwill is reported in the Balance sheet at the asset side side and is reported by the holding
Company, since they consolidate the accounts of all the subsidiary Companies, hence they
consolidate the assets size of all the subsidiary Companies.
b. The Non controlling interest refers to the minority interest, wherein parent Company holds
few of the shares but the impact of that ownership is not very much significant to have a impact
over the decisions of the Company.
The Non Controlling interest is reported by the parent Company at the Assets side as it is a
investment by the parent Company, while preparing consolidated statements.
