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presentation and disclosure requirements for noncontrolling interests. [FAS 164, paragraph B5, sequence 254.2]

958-810-55-19 Formats or levels of detail other than those presented in this Example may be appropriate for other situations. For example, the related net assets and noncontrolling interest would be presented in temporarily or permanently restricted net assets if donor-imposed restrictions on the use of the subsidiary’s net assets existed in this Example (see paragraph 958-810-45-

  • 1)

    . [FAS 164, paragraph B6, sequence 255]

    • >

      > > Assumptions

958-810-55-20 The following assumptions are applicable to all years: [FAS 164, paragraph B7, sequence 256.1.1]

  • a.

    Hospital A, a tax-exempt NFP has one subsidiary, Subsidiary A. That ownership interest in Subsidiary A was purchased; there are no donor- imposed restrictions on the use of Subsidiary A’s net assets. [FAS 164, paragraph B7, sequence 256.1.2]

  • b.

    Subsidiary A is an investor-owned entity that is subject to income taxes. The tax rate for all years is 40 percent. [FAS 164, paragraph B7, sequence 256.1.3]

  • c.

    Subsidiary A has 10,000 shares of common stock outstanding and does not pay dividends. [FAS 164, paragraph B7, sequence 256.1.4]

958-810-55-21 The following assumptions are applicable to 20X2: [FAS 164, paragraph B7, sequence 256.2.1


On January 1, 20X2, Hospital A sells 2,000 of its 10,000 shares in Subsidiary A to an unrelated entity for $50,000 in cash, reducing its ownership interest from 100 percent to 80 percent. Immediately before the sale, Subsidiary A’s equity was as follows. [FAS 164, paragraph B7, sequence 256.2.2]

Subsidiary A

Common stock Paid-in capital Retained earnings Accumulated other comprehensive income

Total equity



25,000 50,000 125,000 5,000 205,000

[FAS 164, paragraph B7, sequence 256.2.3]


The accumulated other comprehensive income balance of $5,000 represents an unrealized gain on a portfolio of securities purchased by Subsidiary A for $100,000, which it classifies as available-for-sale


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