Deloitte
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Chapter 8 — Other Considerations

8.8 Securities of Subsidiaries and Equity Method Investees

8.8 Securities of Subsidiaries and Equity Method Investees

Footnotes

14
It is assumed that the potential common stock is dilutive.
15
In this table, unless otherwise noted, it is assumed that the options on common stock (1) must be share-settled upon exercise, (2) are classified within stockholders’ equity in the parent’s consolidated financial statements, and (3) do not meet the definition of a participating security. See Section 4.7 for a discussion of the EPS accounting related to situations in which a stock option may be settled in cash or stock or is classified as a liability. See Section 8.8.3 for a discussion of the EPS accounting for participating securities of a less-than-wholly-owned consolidated subsidiary.
16
In this table, unless otherwise noted, it is assumed that the convertible debt (1) must be share-settled upon exercise (i.e., no portion of the instrument may be settled in cash), (2) does not contain an embedded conversion option that must be separately accounted for as a derivative instrument, and (3) does not meet the definition of a participating security. See Section 8.8.3 for a discussion of the EPS accounting for participating securities of a less-than-wholly-owned consolidated subsidiary.
17
NCIs may need to be classified in temporary equity if they are puttable to the issuing entity, the parent entity, or a consolidated subsidiary of the parent entity. See Section 9.3 of Deloitte’s Roadmap Noncontrolling Interests for further discussion of the requirements in ASC 480-10-S99-3A related to temporary equity classification.
18
When an NCI is subject to the measurement guidance in ASC 480-10-S99-3A, the parent entity should first apply the recognition and measurement guidance in ASC 810 to the NCI. The measurement guidance in ASC 480-10-S99-3A is applied after the application of ASC 810. A reporting entity’s application of ASC 480-10-S99-3A does not exonerate the entity from the requirements of the accounting and disclosure guidance in ASC 810. See Section 9.4.3 of Deloitte’s Roadmap Noncontrolling Interests for further discussion of the measurement requirements of ASC 480-10-S99-3A.
19
See Chapter 6 of Deloitte’s Roadmap Noncontrolling Interests for further discussion of attribution.
20
This entry has no impact on the parent’s consolidated net income. However, it may affect the amount of net income attributable to NCIs on the face of the reporting entity’s consolidated income statement as well as (directly or indirectly) the amount of income available to the parent’s common stockholders, which is the starting point for the parent’s EPS calculation. The extent to which this entry affects net income attributable to NCIs and therefore net income attributable to the parent’s common stockholders will depend on various policies the reporting entity has elected for classifying this entry, as described in Section 8.8.4.3.2.2.
21
These adjustments are recorded when an NCI’s redemption price exceeds its ASC 810 carrying amount (i.e., its carrying amount after the attribution of income or loss to the NCI). There are two acceptable methods under ASC 480-10-S99-3A(15) that may be applied to record a measurement adjustment related to an NCI that is not currently redeemable: the “accretion method” and the “immediate method.” The immediate method is required if the NCI is currently redeemable. See Table 8-7 for discussion of each method.
22
This amount reflects the portion of an NCI’s redemption price that exceeds the interest’s fair value.
23
This amount reflects the portion of the ASC 480-10-S99-3A offsetting entry arising from the portion of an NCI’s redemption price that is equal to or less than fair value but greater than the redeemable NCI’s ASC 810 carrying amount.
24
The descriptions below assume that the subsidiary only owns common stock of the parent. To the extent that the subsidiary also has potential common shares in the parent, the calculations of diluted EPS must take into account such ownership interests, further complicating the EPS calculations.