How to Make a Consolidated Balance Sheet with Noncontrolling Interest

This video shows how to make a consolidated balance sheet when one company acquires more than 50% but less than 100% of another company. The accounting is slightly different from a 100% acquisition because the purchaser must create a stockholders' equity account called noncontrolling interest, which represents the minority shareholder's claims against the net assets of the target corporation (e.g., if your firm acquires 70% of a target, you must consolidated 100% of the target's assets and liabilities but then recognize a noncontrolling interest for the shareholders who own the remaining 30% of the target).

The consolidated balance sheet presents the assets and liabilities of the combined entity, but it is not as simple as adding the figures from the 2 separate balance sheets together (this would result in double-counting). To create the consolidated balance sheet, one must make a series of adjusting and eliminating entries that do the following:
1. Eliminate the purchaser's investment in the target
2. Eliminate the target's stockholders' equity accounts
3. Step up the target's assets to their fair value
4. Recognize any goodwill
5. Recognize the noncontrolling interest—
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