Asked by Mikey Grauso on Jun 27, 2024
Verified
What is the impact on the noncontrolling interest of a subsidiary when there are downstream transfers of inventory between the parent and subsidiary companies?
Noncontrolling Interest
The portion of equity interest in a subsidiary not held by the parent company.
Downstream Transfers
Transactions involving the transfer of goods or services from a parent company to a subsidiary or among subsidiaries.
Parent and Subsidiary
Describes the relationship between a controlling company (parent) and a controlled company (subsidiary), often through ownership of a significant portion of shares.
- Discuss the effect of downstream transfers on the noncontrolling interest within consolidated financial statements.
Verified Answer
JP
Jinal PatelJul 01, 2024
Final Answer :
Downstream transfers do not impact noncontrolling interest. Only upstream transfers will have an effect on the noncontrolling interest of a subsidiary.
Learning Objectives
- Discuss the effect of downstream transfers on the noncontrolling interest within consolidated financial statements.