If a company owns over 50 percent of another company (subsidiary), the financial statements of the two

Question:

If a company owns over 50 percent of another company (subsidiary), the financial statements of the two entities are consolidated into one larger entity. For example, the 2008 financial statements of Verizon Communications, Inc. include the financial statements of Verizon Wireless, the cellular phone operator, owned 55 percent by Verizon Communications and 45 percent by Vodafone. Vodafone’s interest in the assets and liabilities reported on Verizon’s balance sheet are represented in an account on the balance sheet called “minority interest” (non-controlling interest) in the amount of approximately $37 billion, which is over 18 percent of Verizon’s total assets.

REQUIRED:

a. Explain how non-controlling interest ends up on the balance sheet.

b. Discuss whether it should be classified as an asset, a liability, or a shareholders’ equity item.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...