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Exhibit 2 illustrates NCI accounting for a basic combination scenario.

Going forward from the acquisition date, the NCI balance will increase or decrease based on its proportionate share of the subsidiary’s profits and losses.

There is much more to the standard than just this name change.

Existing accounting for the NCI is a slapdash mix of practices that is not aligned with any particular concept and certainly does not produce information useful for rational decisions.

Since the current treatment allows nondescript measures of top-line performance, the new standard will eliminate this option. 160, subsidiary revenues and expenses arising only after the date of combination will be reported on the consolidated income statement. The cash flow and equity statements will report the outcome of the period’s events for the entire consolidated enterprise.

This display will allow users to see cash flows and other equity changes flowing from all assets and liabilities under the parent management’s control.

160 was issued as a separate standard because the original Statement no.

The result will be more informative financial statements that reflect how the existence of and changes in noncontrolling interests (NCI) can affect cash flow potential for the consolidated entity and its shareholders. 160 is the name change from “minority interest” to “noncontrolling interest.” The problem with the old terminology was that it did not encompass the full range of combination scenarios.


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