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When there is an acquisition of a subsidiary and the ownership is less than 100% for...

When there is an acquisition of a subsidiary and the ownership is less than 100% for a controlling interest, why is it necessary to break-out the consolidated financial statements into controlling and non-controlling interest?

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Answer #1

Non controlling assets are not owned by parent company.The parent company reports the financial results of the subsidiary company in its consolidated balance sheet to present a claim on assets by minority shareholders or in its consolidated income statement as a percentage of profits belonging to minority shareholders.

Minority interest shareholders have less influence on a firm’s management and policies, and restricted voting rights, but they offer significant growth for the firm with their experience and capital.

therefore it is necessary to to break financial statement into controlling and non controlling interest.

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