Measuring goodwill and noncontrolling interest under the new consolidation accounting standards

James G.S. Yang and Frank J. Aquilino

Journal of Financial Reporting and Accounting, 2017, vol. 15, issue 2, 198-207

Abstract: Purpose - The accounting standards for consolidated financial statements have been updated recently. The change involves the measurement of goodwill and noncontrolling interest. Under the new accounting standards, goodwill consists of not only the parent company’s portion but also the noncontrolling interest’s share. The noncontrolling interest comprises both the subsidiary’s identifiable net assets and goodwill. In addition, it further changes the treatment of noncontrolling interest from liability to equity. The change indeed has far-reaching consequences on financial statements. This paper formulates an equation to measure goodwill and noncontrolling interest. It also provides some examples for illustrative purposes. The purpose of this paper is to update the financial reporting to the current standards. Design/methodology/approach - New accounting standards under FASB #141R and 160. Findings - New accounting standards in measuring goodwill and noncontrolling interest in financial reporting. Research limitations/implications - The knowledge is useful for accountants and financial analysts. Practical implications - Improve the quality of financial statements. Social implications - Investors will be better informed. Originality/value - This new accounting standard was not explored before.

Keywords: Taxation; Financial reporting; Accounting; Forensic accounting; Financial accounting (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrapp:jfra-05-2015-0055

DOI: 10.1108/JFRA-05-2015-0055

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