Question

Companies are required to value non-controlling interests on the acquisition date. What approaches might a company...

Companies are required to value non-controlling interests on the acquisition date. What approaches might a company take to value non-controlling interest? [Hint: see FASB ASC 805 20-30-7], When in the consolidated balance sheet should non-controlling interests be required? [Hint: see FASB ASC 810-10-45-16]

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Answer #1

Approaches to value non controlling interest:

1. NCI on valuation date is required to calculated on the basis of fair value on acquisition date. This can be benchmarked to market rate of equity shares, in case the acquiree is listed or on the basis of valuation done by an expert valuer

NCI is defined as the equity interest in a subsidiary which is not attributable to the parent, whether directly or indirectly. Therefore, whenever any entity has a partly held subsidiary, the consolidated financial statements will have a non controlling interest

Please comment for any further discussion/clarifications

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