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Statement of Financial Accounting Standards No. 130 - page 41 / 57





41 / 57

Display of Other Comprehensive Income under the Equity Method of Accounting

120. Under APB Opinion No. 18, The Equity Method of Accounting for

Investments in Common Stock, an investor records its proportionate share of

the investee's net income (net loss) as investment income along with a

corresponding increase (decrease) to the investment account.  Several

respondents to the Exposure Draft asked the Board to address the question

of how an investor should record its proportionate share of the investee's

other comprehensive income.

121. Paragraph 19(e) of Opinion 18 states that a transaction of an investee

of a capital nature that affects the investor's share of stockholders'

equity of the investee should be accounted for as if the investee were a

consolidated subsidiary.  Therefore, an investor records its proportionate

share of the investee's equity adjustments for other comprehensive income

(unrealized gains and losses on available-for-sale securities, minimum

pension liability adjustments, and foreign currency items) as increases or

decreases to the investment account with corresponding adjustments in

equity.  Under this Statement, an enterprise may elect to display other

comprehensive income in an income-statement-type format (below net income

or in a separate statement beginning with net income) or in a statement-of-

changes-in-equity format.

122. The Board decided that the format in which an investee displays other

comprehensive income should not impact how an investor displays its

proportionate share of those amounts.  Therefore, regardless of how an

investee chooses to display other comprehensive income, an investor should

be permitted to combine its proportionate share of those amounts with its

own other comprehensive income items and display the aggregate of those

amounts in an income-statement-type format or in a statement of changes in


Other Comprehensive Income of Subsidiaries

123. The October 1995 FASB Exposure Draft of a proposed Statement,

Consolidated Financial Statements:  Policy and Procedures, would require

that a portion of the net income or loss of a subsidiary that is not wholly

owned be attributed to the noncontrolling interest (minority interest) on

the basis of its proportionate interest in the subsidiary's net income or

loss.  The net income attributable to the noncontrolling interest would be

deducted from consolidated net income to arrive at an amount called net

income attributable to the controlling interest.  If that Statement is

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