Specifics of accounting treatment of non-controlling interests (minority interests) in a business merger

Abstract

Apart from buying a 100% stake in the capital of the target corporation, a merger can also be achieved solely by the purchase of the controlling interest. In this case, for the acquiring corporation there is the problem of an adequate distribution of non-controlling interests in the consolidated financial statement. Relevant accounting associations suggest that these interests can adequately be measured either by means of fair value or by the non-controlling interest's proportionate share of the acquiree's identifiable net asset. It is later possible for the majority owners to choose the accounting treatment, which allows the owners an equitable share in the net assets in the event of liquidation, while other shares are measured according to the principle of the fair value.