11.3 General Disclosures for Consolidated Subsidiaries

50-1 Consolidated financial statements shall disclose the consolidation policy that is being followed. In most cases this can be made apparent by the headings or other information in the financial statements, but in other cases a note to financial statements is required.

50-1A A parent with one or more less-than-wholly-owned subsidiaries shall disclose all of the following for each reporting period:

1. Separately, on the face of the consolidated financial statements, both of the following:

   1. The amounts of consolidated net income and consolidated comprehensive income
   2. The related amounts of each attributable to the parent and the noncontrolling interest.
2. Either in the notes or on the face of the consolidated income statement, amounts attributable to the parent for any of the following, if reported in the consolidated financial statements:

   1. Income from continuing operations
   2. Discontinued operations
   3. Subparagraph superseded by Accounting Standards Update No. 2015-01.
3. Either in the consolidated statement of changes in equity, if presented, or in the notes to consolidated financial statements, a reconciliation at the beginning and the end of the period of the carrying amount of total equity (net assets), equity (net assets) attributable to the parent, and equity (net assets) attributable to the noncontrolling interest. That reconciliation shall separately disclose all of the following:

   1. Net income
   2. Transactions with owners acting in their capacity as owners, showing separately contributions from and distributions to owners
   3. Each component of other comprehensive income.
4. In notes to the consolidated financial statements, a separate schedule that shows the effects of any changes in a parent’s ownership interest in a subsidiary on the equity attributable to the parent.

Example 2 (see paragraph 810-10-55-4G) illustrates the application of the guidance in this paragraph.

55-4G This Example illustrates the application of this Subtopic’s presentation and disclosure guidance by a parent with one or more less-than-wholly-owned subsidiaries.

55-4H This Example involves all of the following assumptions:

1. Entity ABC has one subsidiary, Subsidiary A.
2. The tax rate for all years is 40 percent.
3. Entity ABC has 200,000 shares of common stock outstanding and pays dividends of $10,000 each year on those common shares. Entity ABC has no potentially dilutive shares.
4. Subsidiary A has 10,000 shares of common stock outstanding and does not pay dividends.
5. Entity ABC owns all 10,000 shares in Subsidiary A for the entire year 20X1.
6. On June 30, 20X1, Subsidiary A purchases a portfolio of securities for $100,000 and classifies those securities as available for sale.
7. On December 31, 20X1, the carrying amount of the available-for-sale securities is $105,000.
8. For the year ended December 31, 20X1, the amount of Subsidiary A’s net income included in the consolidated financial statements is $24,000.
9. On January 1, 20X2, Entity ABC sells 2,000 of its shares in Subsidiary A to an unrelated entity for $50,000 in cash, reducing its ownership interest from 100 percent to 80 percent.
10. Immediately before the January 1, 20X2 sale, Subsidiary A’s equity was as follows:
11. The January 1, 20X2 sale of Subsidiary A’s shares by Entity ABC is accounted for as an equity transaction in the consolidated financial statements, as follows:

    1. A noncontrolling interest is recognized in the amount of $41,000 ($205,000 × 20 percent).
    2. Additional paid-in capital attributable to Entity ABC is increased by $9,000, calculated as the difference between the cash received ($50,000) and the carrying amount of the noncontrolling interest ($41,000).
    3. Additional paid-in capital attributable to Entity ABC is also increased by $1,000, which represents the carrying amount of Subsidiary A’s accumulated other comprehensive income related to the ownership interest sold to the noncontrolling interest ($5,000 × 20 percent = $1,000). Accumulated other comprehensive income attributable to Entity ABC is decreased by a corresponding amount.
    4. The journal entry to record the sale of Subsidiary A’s shares to the noncontrolling shareholders is as follows:
12. For the year ended December 31, 20X2, the amount of Subsidiary A’s net income included in the consolidated financial statements is $20,000.
13. On January 1, 20X3, Entity ABC purchases 1,000 shares in Subsidiary A from the noncontrolling shareholders (50 percent of the noncontrolling interest) for $30,000 for cash, increasing its ownership interest from 80 percent to 90 percent.
14. Immediately before the January 1, 20X3 purchase, the carrying amount of the noncontrolling interest in Subsidiary A was $48,000, which included $4,000 in accumulated other comprehensive income.
15. The January 1, 20X3 purchase of shares from the noncontrolling shareholders is accounted for as an equity transaction in the consolidated financial statements, as follows:

    1. The noncontrolling interest balance is reduced by $24,000 ($48,000 × 50 percent interest acquired by Entity ABC).
    2. Additional paid-in capital of Entity ABC is decreased by $6,000, calculated as the difference between the cash paid ($30,000) and the adjustment to the carrying amount of the noncontrolling interest ($24,000).
    3. Additional paid-in capital of Entity ABC is also decreased by $2,000, which represents the carrying amount of Subsidiary A’s accumulated other comprehensive income related to the ownership interest purchased from the noncontrolling shareholders ($4,000 × 50 percent = $2,000).
    4. Accumulated comprehensive income attributable to Entity ABC is increased by a corresponding amount ($2,000).
    5. The journal entry to record that purchase of Subsidiary A’s shares from the noncontrolling shareholders is as follows:
16. For the year ended December 31, 20X3, the amount of Subsidiary A’s net income included in the consolidated financial statements is $15,000.

55-4I This consolidated statement of financial position illustrates application of the requirement in paragraph 810-10-45-16 that Entity ABC present the noncontrolling interest in the consolidated statement of financial position within equity, but separately from the parent’s equity.

55-4J This consolidated statement of income illustrates the requirements in paragraph 810-10-50-1A that the amounts of consolidated net income and the net income attributable to Entity ABC and the noncontrolling interest be presented separately on the face of the consolidated income statement. It also illustrates the requirement in paragraph 810-10-50-1A(b) that the amounts of income from continuing operations and discontinued operations attributable to Entity ABC should be disclosed.

55-4K This statement of consolidated comprehensive income illustrates the requirements in paragraph 810-10-50-1A(a) that the amounts of consolidated comprehensive income and comprehensive income attributable to Entity ABC and the noncontrolling interest be presented separately on the face of the consolidated statement in which comprehensive income is presented.

55-4L This consolidated statement of changes in equity illustrates the requirements in paragraph 810-10-50-1A(c) that Entity ABC present a reconciliation at the beginning and the end of the period of the carrying amount of total equity, equity attributable to Entity ABC, and equity attributable to the noncontrolling interest. It also illustrates that because the noncontrolling interest is part of the equity of the consolidated group, it is presented in the statement of changes in equity.