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Hi, need to submit a 750 words essay on the topic Advanced Accounting.unction is to adjust the account balances of each individual company to give an amount that would be used if the entities were one
Hi, need to submit a 750 words essay on the topic Advanced Accounting.
unction is to adjust the account balances of each individual company to give an amount that would be used if the entities were one company (Stice and Stice, 2013).
Non-controlling interest refers to that part of a subsidiary that the parent company does not own. The non-controlling interest should be considered during consolidation as they form part of the capital for the subsidiary. The non-controlling interest may appear as beginning of period non-controlling interest or end of period non-controlling interest (Wahlen, Baginski, Bradshaw, 2014). To determine the beginning of period non-controlling balance, one uses the percentage of the non-controlling interest to determine their shareholding in the company. That percentage is used to determine the non-controlling interest’s share of ordinary share capital, preference share capital and retained earnings. To arrive at the balance, credit the non-controlling interest account with their share of ordinary share capital and preference share capital. Debit the capital account with the same amount. Then credit the non-controlling interest account with the non-controlling interest’s share of retained earnings. Debit the profit and loss account with the same amount. That will give the non-controlling interest balance at the beginning of the period.
The determination of the end of period non-controlling interest balance involves more than what the beginning balance requires. It involves making adjustments on various items. The account balance changes courtesy of changes in retained earnings (Wahlen, Baginski, Bradshaw, 2014). The items that would cause the changes include unrealized profits, unrealized profits on sale of property, plant and equipment and revaluation gains. To reflect these changes, debit the non-controlling interest account by the minority interest’s share of the unrealized profits and credit the closing inventory account with the same amount. For unrealized profits on the sale of property, plant
