When accounting for the acquisition of a non-wholly owned subsidiary, the parent can use entity theory or parent company extension theory to account for the business combination. Access the 2011 consolidated financial statements for Thomson Reuters Corporation by going to the investor relations section of the company's website. Answer the questions below for 2011. Round percentages to one decimal pint and other ratios to two decimal points. For each question, indicate where in the financial statements you found the answer, and/or provide a brief explanation.
(a) Which theory of consolidation is used to value non-controlling interest at the date of acquisition?
(b) What percentage of net income for the year is represented by non-controlling interest (sometimes referred to as minority interest)?
(c) What portion of the additions to other intangible assets during the year came from business combinations, and what portion came from direct purchases?
(d) What was the goodwill impairment loss for the year, or what were total impairment losses? Describe the two main factors contributing to the goodwill impairment.
(e) Assume that performance bonuses for the company's top executives are based, in part, on net income. How will the goodwill impairment loss for the year affect the bonuses for the executives in the current year? in future years?
(f) Explain why different discount rates are used for different geographical areas, and explain how a change in discount rate can negatively affect the value of goodwill.
(g) Assume that the company used the other acceptable theory of consolidation for valuing non-controlling interest accounting. How would this change in theory affect the return on total shareholders' equity for the first year after the date of acquisition?