Final answer:
A non-arm's length transaction, where the buyer and seller have a pre-existing relationship, does not affect the noncontrolling interest in a company, as it may not impact the market price or finances in a way that affects minority shareholders.
Step-by-step explanation:
If the original sale was a non-arm's length transaction, it has no effect on the noncontrolling interest. In the context of accounting and business, a non-arm's length transaction refers to a business deal where the buyer and seller have a pre-existing relationship, which may lead to potential conflicts of interest or an unfair market price.
This is in contrast to an arm's length transaction, where the parties act independently and have no relationship to one another, ensuring that the market price is more likely to be fair and accurate.
For the noncontrolling interest, which refers to minority shareholders who do not have control over the company, transactions between related parties do not impact their share of equity, unless such transactions directly affect the finances or operations of the company in which the noncontrolling interest is held.
If the original sale was a(n) intercompany transaction, it has no effect on the noncontrolling interest.
Intercompany transactions occur between two entities that are under common control, such as a parent company and its subsidiary. Since the noncontrolling interest represents the portion of the subsidiary's equity that is not owned by the parent company, it is not affected by transactions between the two.