Question

If a parent company holds a noncontrolling interest in a subsidiary company, must the parent company present an allocation of net income or loss that is attributable to the noncontrolling interest?

1) True
2) False

Answer 1

A parent company must allocate and report the share of net income or loss attributable to the noncontrolling interest in a subsidiary to ensure complete and transparent financial statements.

Step-by-step explanation:

If a parent company holds a noncontrolling interest in a subsidiary, it is indeed required to present an allocation of net income or loss that is attributable to the noncontrolling interest. This means the parent company must report both its own share of the subsidiary's profits or losses and also the portion that belongs to the noncontrolling interest. This requirement ensures the financial statements present a complete and clear view of the financial position and performance of the group of companies, which includes both the parent and its subsidiaries.