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Business Combinations less than-100 percent ownership

Acquirer recognizes and measures at the acquisition date the:
- Identifiable assets acquired and liabilities assumed at their full fair values
- Non-controlling interest at FAIR VALUE
-Goodwill or a gain from a bargain purchase

Non-controlling Interest Fair Value as evidence by Market trades

The valuations of the non-controlling interest is best evidenced by the trades fair value of shares, not the price paid by the parent. As a result, goodwill allocated to the controlling and non-controlling interest will not always be proportional to the percentages owned.

Bargain purchase occurs

The parent recognizes the entire gain on bargain purchase in current income. In no case is any amount of the gain allocated to the non-controlling interest.

Allocating the Subsidiary's Net Income to the Parent and Non-controlling interests

The non-controlling interest in the subsidiary net income is subtracted from the combined entity's consolidated net income to derive the parent's interest in consolidated net income

Acquisition Method

Subsequent to acquisition, changes in fair values for assets and liabilities are not recognized. Instead, the subsidiary assets acquired and liabilities assumed are reflected in future consolidated statements using their acquisition-date fair values net of subsequent amortizations.


Although 100 percent of the subsidiary's assets and liabilities will be combined in consolidation, the internal accounting for Parent's investment in Sub's is based on its percent ownership. (Includes: prior and current year income, and dividends declared)

Non-controlling Interest in Subsidiary

Percent of the subsidiary's year-end book value adjusted for any unamortized excess fair values attributed to the non-controlling interest.
Beg BV + Beg RE = NI in income
Subtract dividends paid to non-controlling interest= Non-controlling interest at 12/31/10

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