Final answer:
The requirements of SFAS 160 indicate that noncontrolling interests should be presented within equity separately from the parent company's equity, and the consolidated income statement should specify income attributable to both the parent and to noncontrolling interests, enhancing transparency and clarity.
Step-by-step explanation:
The SFAS 160 requirements for displaying noncontrolling interests in the consolidated income statement have changed from past practices. Instead of being presented as a deduction from total equity or somewhere in the liabilities section, noncontrolling interests are now required to be presented within equity, but separate from the parent company's equity. Additionally, the income statement should report the amounts of net income attributable to the parent and to the noncontrolling interest.
This change reflects the view that noncontrolling interests are part of the equity of the consolidated entity and not merely an outside interest or obligation. Therefore, it promotes greater transparency in representing the financial results and position of the consolidated group, including the interests of all equity participants.
Income allocated to noncontrolling interests must be clearly identified on the income statement to enable users of the financial statements to understand the impact that noncontrolling interests have on the performance of the group. This treatment ensures that the financial performance of the subsidiary attributable to noncontrolling interests is not mixed with the income attributable to the parent company's shareholders.