# ASC 810-10-45: Consolidation — Overall — 45 Other Presentation Matters

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/810/10/#45-other-presentation-matters)

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## ASC 810-10-45: 45 Other Presentation Matters

[Read section](https://asc.understandingaccounting.org/asc/810/10/#45-other-presentation-matters)

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#### Procedures

##### [810-10-45-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-1)

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In the preparation of [consolidated financial statements](https://asc.understandingaccounting.org/glossary/c/#consolidated-financial-statements "The financial statements of a consolidated group of entities that include a parent and all its subsidiaries presented as those of a single economic entity."), intra-entity balances and transactions shall be eliminated. This includes intra-entity open account balances, security holdings, sales and purchases, interest, dividends, and so forth. As consolidated financial statements are based on the assumption that they represent the financial position and operating results of a single economic entity, such statements shall not include gain or loss on transactions among the entities in the [consolidated group](https://asc.understandingaccounting.org/glossary/c/#consolidated-group "A parent and all its subsidiaries."). Accordingly, any intra-entity profit or loss on assets remaining within the consolidated group shall be eliminated; the concept usually applied for this purpose is gross profit or loss (see also paragraph [810-10-45-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-8)).

##### [810-10-45-2](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-2)

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The retained earnings or deficit of a [subsidiary](https://asc.understandingaccounting.org/glossary/s/#subsidiary "An entity, including an unincorporated entity such as a partnership or trust, in which another entity, known as its parent, holds a controlling financial interest. (Also, a variable interest entity that is consolidated by a primary beneficiary.)") at the date of acquisition by the [parent](https://asc.understandingaccounting.org/glossary/p/#parent "An entity that has a controlling financial interest in one or more subsidiaries. (Also, an entity that is the primary beneficiary of a variable interest entity.)") shall not be included in consolidated retained earnings.

##### [810-10-45-3](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-3)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [810-10-45-4](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-4)

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When a subsidiary is initially consolidated during the year, the consolidated financial statements shall include the subsidiary's revenues, expenses, gains, and losses only from the date the subsidiary is initially consolidated.

##### [810-10-45-5](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-5)

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Shares of the parent held by a subsidiary shall not be treated as outstanding shares in the consolidated statement of financial position and, therefore, shall be eliminated in the consolidated financial statements and reflected as treasury shares.

##### [810-10-45-6](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-6)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [810-10-45-7](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-7)

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[Paragraph not used](https://asc.understandingaccounting.org/updates/page-1833002/).

##### [810-10-45-8](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-8)

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If income taxes have been paid on intra-entity profits on [inventory](https://asc.understandingaccounting.org/glossary/i/#inventory "The aggregate of those items of tangible personal property that have any of the following characteristics: Held for sale in the ordinary course of business In process of production for such sale To be currently consumed in the production of goods or services to be available for sale. The term inventory embraces goods awaiting sale (the merchandise of a trading concern and the finished goods of a manufacturer), goods in the course of production (work in process), and goods to be consumed directly or indirectly in production (raw materials and supplies). This definition of inventories excludes long-term assets subject to depreciation accounting, or goods which, when put into use, will be so classified. The fact that a depreciable asset is retired from regular use and held for sale does not indicate that the item should be classified as part of the inventory. Raw materials and supplies purchased for production may be used or consumed for the construction of long-term assets or other purposes not related to production, but the fact that inventory items representing a small portion of the total may not be absorbed ultimately in the production process does not require separate classification. By trade practice, operating materials and supplies of certain types of entities such as oil producers are usually treated as inventory.") remaining within the consolidated group, those taxes shall be deferred or the intra-entity profits to be eliminated in consolidation shall be appropriately reduced.

##### [810-10-45-9](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-9)

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Occasionally, subsidiaries capitalize retained earnings arising since acquisition, by means of a stock dividend or otherwise. This does not require a transfer to retained earnings on consolidation because the retained earnings in the consolidated financial statements shall reflect the accumulated earnings of the consolidated group not distributed to the [owners](https://asc.understandingaccounting.org/glossary/o/#owners "Used broadly to include holders of ownership interests (equity interests) of investor-owned entities, mutual entities, or not-for-profit entities. Owners include shareholders, partners, proprietors, or members or participants of mutual entities. Owners also include owner and member interests in the net assets of not-for-profit entities.") of, or capitalized by, the parent.

#### Combined Financial Statements

##### [810-10-45-10](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-10)

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If [combined financial statements](https://asc.understandingaccounting.org/glossary/c/#combined-financial-statements "The financial statements of a combined group of commonly controlled entities or commonly managed entities presented as those of a single economic entity. The combined group does not include the parent.") are prepared for a group of related entities, such as a group of commonly controlled entities, intra-entity transactions and profits or losses shall be eliminated, and [noncontrolling interests](https://asc.understandingaccounting.org/glossary/n/#noncontrolling-interest "The portion of equity (net assets) in a subsidiary not attributable, directly or indirectly, to a parent. A noncontrolling interest is sometimes called a minority interest."), foreign operations, different fiscal periods, or income taxes shall be treated in the same manner as in consolidated financial statements.

#### Parent-Entity Financial Statements

##### [810-10-45-11](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-11)

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In some cases parent-entity financial statements may be needed, in addition to consolidated financial statements, to indicate adequately the position of bondholders and other creditors or preferred shareholders of the parent. Consolidating financial statements, in which one column is used for the parent and other columns for particular subsidiaries or groups of subsidiaries, often are an effective means of presenting the pertinent information. However, consolidated financial statements are the general-purpose financial statements of a parent having one or more subsidiaries; thus, parent-entity financial statements are not a valid substitute for consolidated financial statements.

#### Differing Fiscal Year-Ends Between Parent and Subsidiary

##### [810-10-45-12](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-12)

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It ordinarily is feasible for the subsidiary to prepare, for consolidation purposes, financial statements for a period that corresponds with or closely approaches the fiscal period of the parent. However, if the difference is not more than about three months, it usually is acceptable to use, for consolidation purposes, the subsidiary's financial statements for its fiscal period; if this is done, recognition should be given by disclosure or otherwise to the effect of intervening events that materially affect the financial position or results of operations.

#### A Change in the Fiscal Year-End Lag Between Subsidiary and Parent

##### [810-10-45-13](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-13)

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A parent or an investor should report a change to (or the elimination of) a previously existing difference between the parent's reporting period and the reporting period of a consolidated entity or between the reporting period of an investor and the reporting period of an equity method investee in the parent's or investor's consolidated financial statements as a change in accounting principle in accordance with the provisions of Topic 250. While that Topic generally requires voluntary changes in accounting principles to be reported retrospectively, retrospective application is not required if it is impracticable to apply the effects of the change pursuant to paragraphs

[250-10-45-9 through 45-10](https://asc.understandingaccounting.org/asc/250/10/#250-10-45-9)

. The change or elimination of a lag period represents a change in accounting principle as defined in Topic 250. The scope of this paragraph applies to all entities that change (or eliminate) a previously existing difference between the reporting periods of a parent and a consolidated entity or an investor and an equity method investee. That change may include a change in or the elimination of the previously existing difference (lag period) due to the parent's or investor's ability to obtain financial results from a reporting period that is more consistent with, or the same as, that of the parent or investor. This paragraph does not apply in situations in which a parent entity or an investor changes its fiscal year-end.

#### Proportionate Consolidation

##### [810-10-45-14](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-14)

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If the investor-venturer owns an undivided interest in each asset and is proportionately liable for its share of each liability, the provisions of paragraph [323-10-45-1](https://asc.understandingaccounting.org/asc/323/10/#323-10-45-1) may not apply in some industries. For example, in certain industries the investor-venturer may account in its financial statements for its pro rata share of the assets, liabilities, revenues, and expenses of the venture. Specifically, a proportionate gross financial statement presentation is not appropriate for an investment in an unincorporated legal entity accounted for by the equity method of accounting unless the investee is in either the construction industry (see paragraph [910-810-45-1](https://asc.understandingaccounting.org/asc/810/910/#810-910-45-1)) or an extractive industry (see paragraphs [930-810-45-1](https://asc.understandingaccounting.org/asc/810/930/#810-930-45-1) and [932-810-45-1](https://asc.understandingaccounting.org/asc/810/932/#810-932-45-1)). An entity is in an extractive industry only if its activities are limited to the extraction of mineral resources (such as oil and gas exploration and production) and not if its activities involve related activities such as refining, marketing, or transporting extracted mineral resources.

#### Noncontrolling Interest in a Subsidiary

##### [810-10-45-15](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-15)

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The ownership interests in the subsidiary that are held by owners other than the parent is a noncontrolling interest. The noncontrolling interest in a subsidiary is part of the equity of the consolidated group.

##### [810-10-45-16](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-16)

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The noncontrolling interest shall be reported in the consolidated statement of financial position within equity (net assets), separately from the parent's equity (or net assets). That amount shall be clearly identified and labeled, for example, as noncontrolling interest in subsidiaries (see paragraph [810-10-55-4I](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4I)). An entity with noncontrolling interests in more than one subsidiary may present those interests in aggregate in the consolidated financial statements. A [not-for-profit entity](https://asc.understandingaccounting.org/glossary/n/#not-for-profit-entity "An entity that possesses the following characteristics, in varying degrees, that distinguish it from a business entity: Contributions of significant amounts of resources from resource providers who do not expect commensurate or proportionate pecuniary return Operating purposes other than to provide goods or services at a profit Absence of ownership interests like those of business entities. Entities that clearly fall outside this definition include the following: All investor-owned entities Entities that provide dividends, lower costs, or other economic benefits directly and proportionately to their owners, members, or participants, such as mutual insurance entities, credit unions, farm and rural electric cooperatives, and employee benefit plans.") shall report the effects of any donor-imposed restrictions, if any, in accordance with paragraph [958-810-45-1](https://asc.understandingaccounting.org/asc/810/958/#810-958-45-1).

##### [810-10-45-16A](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-16A)

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Only either of the following can be a noncontrolling interest in the consolidated financial statements:

1.  a
    
    A financial instrument (or an embedded feature) issued by a subsidiary that is classified as equity in the subsidiary's financial statements
    
2.  b
    
    A financial instrument (or an embedded feature) issued by a parent or a subsidiary for which the payoff to the counterparty is based, in whole or in part, on the stock of a consolidated subsidiary, that is considered indexed to the entity's own stock in the consolidated financial statements of the parent and that is classified as equity.

##### [810-10-45-17](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-17)

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A financial instrument issued by a subsidiary that is classified as a liability in the subsidiary's financial statements based on the guidance in other Subtopics is not a noncontrolling interest because it is not an ownership interest. For example, Topic 480 provides guidance for classifying certain financial instruments issued by a subsidiary.

##### [810-10-45-17A](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-17A)

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An equity-classified instrument (including an embedded feature that is separately recorded in equity under applicable GAAP) within the scope of the guidance in paragraph [815-40-15-5C](https://asc.understandingaccounting.org/asc/815/40/#815-40-15-5C) shall be presented as a component of noncontrolling interest in the consolidated financial statements whether the instrument was entered into by the parent or the subsidiary. However, if such an equity-classified instrument was entered into by the parent and expires unexercised, the carrying amount of the instrument shall be reclassified from the noncontrolling interest to the controlling interest.

#### Attributing Net Income and Comprehensive Income to the Parent and the Noncontrolling Interest

##### [810-10-45-18](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-18)

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The amount of intra-entity income or loss to be eliminated in accordance with paragraph [810-10-45-1](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-1) is not affected by the existence of a noncontrolling interest. The complete elimination of the intra-entity income or loss is consistent with the underlying assumption that consolidated financial statements represent the financial position and operating results of a single economic entity. The elimination of the intra-entity income or loss may be allocated between the parent and noncontrolling interests.

##### [810-10-45-19](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-19)

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Revenues, expenses, gains, losses, net income or loss, and other comprehensive income shall be reported in the consolidated financial statements at the consolidated amounts, which include the amounts attributable to the owners of the parent and the noncontrolling interest.

##### [810-10-45-20](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-20)

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Net income or loss and comprehensive income or loss, as described in Topic 220, shall be attributed to the parent and the noncontrolling interest.

##### [810-10-45-21](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-21)

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Losses attributable to the parent and the noncontrolling interest in a subsidiary may exceed their interests in the subsidiary's equity. The excess, and any further losses attributable to the parent and the noncontrolling interest, shall be attributed to those interests. That is, the noncontrolling interest shall continue to be attributed its share of losses even if that attribution results in a deficit noncontrolling interest balance.

#### Changes in a Parent's Ownership Interest in a Subsidiary

##### [810-10-45-21A](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-21A)

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The guidance in paragraphs

[810-10-45-22 through 45-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-22)

applies to the following:

1.  a
    
    Transactions that result in an increase in ownership of a subsidiary
    
2.  b
    
    Transactions that result in a decrease in ownership of either of the following while the parent retains a controlling financial interest in the subsidiary:
    
    1.  1
        
        A subsidiary that is a business or a [nonprofit activity](https://asc.understandingaccounting.org/glossary/n/#nonprofit-activity "An integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing benefits, other than goods or services at a profit or profit equivalent, as a fulfillment of an entity's purpose or mission (for example, goods or services to beneficiaries, customers, or members). As with a not-for-profit entity, a nonprofit activity possesses characteristics that distinguish it from a business or a for-profit business entity."), except for either of the following:
        
        1.  i
            
            [Subparagraph superseded by Accounting Standards Update No. 2017-05](https://asc.understandingaccounting.org/updates/asu-2017-05/).
            
        2.  ii
            
            A conveyance of oil and gas mineral rights (for guidance on conveyances of oil and gas mineral rights and related transactions, see Subtopic 932-360).
            
        3.  iii
            
            A transfer of a good or service in a contract with a customer within the scope of Topic 606.
            
    2.  2
        
        A subsidiary that is not a business or a nonprofit activity if the substance of the transaction is not addressed directly by guidance in other Topics that include, but are not limited to, all of the following:
        
        1.  i
            
            Topic 606 on revenue from contracts with customers
            
        2.  ii
            
            Topic 845 on exchanges of nonmonetary assets
            
        3.  iii
            
            Topic 860 on transferring and servicing financial assets
            
        4.  iv
            
            Topic 932 on conveyances of mineral rights and related transactions
            
        5.  v
            
            Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets.

##### [810-10-45-22](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-22)

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A parent's ownership interest in a subsidiary might change while the parent retains its controlling financial interest in the subsidiary. For example, a parent's ownership interest in a subsidiary might change if any of the following occur:

1.  a
    
    The parent purchases additional ownership interests in its subsidiary.
    
2.  b
    
    The parent sells some of its ownership interests in its subsidiary.
    
3.  c
    
    The subsidiary reacquires some of its ownership interests.
    
4.  d
    
    The subsidiary issues additional ownership interests.

##### [810-10-45-23](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-23)

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Changes in a parent's ownership interest while the parent retains its controlling financial interest in its subsidiary shall be accounted for as equity transactions (investments by owners and distributions to owners acting in their capacity as owners). Therefore, no gain or loss shall be recognized in consolidated net income or comprehensive income. The carrying amount of the noncontrolling interest shall be adjusted to reflect the change in its ownership interest in the subsidiary. Any difference between the fair value of the consideration received or paid and the amount by which the noncontrolling interest is adjusted shall be recognized in equity attributable to the parent. Example 1 (paragraph [810-10-55-4B](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4B)) illustrates the application of this guidance.

##### [810-10-45-24](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-24)

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A change in a parent's ownership interest might occur in a subsidiary that has accumulated other comprehensive income. If that is the case, the carrying amount of accumulated other comprehensive income shall be adjusted to reflect the change in the ownership interest in the subsidiary through a corresponding charge or credit to equity attributable to the parent. Example 1, Case C (paragraph [810-10-55-4F](https://asc.understandingaccounting.org/asc/810/10/#810-10-55-4F)) illustrates the application of this guidance.

### Variable Interest Entities

##### [810-10-45-25](https://asc.understandingaccounting.org/asc/810/10/#810-10-45-25)

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A reporting entity shall present each of the following separately on the face of the statement of financial position:

1.  a
    
    Assets of a consolidated [variable interest entity](https://asc.understandingaccounting.org/glossary/v/#variable-interest-entity "A legal entity subject to consolidation according to the provisions of the Variable Interest Entities Subsections of Subtopic 810-10.") (VIE) that can be used only to settle obligations of the consolidated VIE
    
2.  b
    
    Liabilities of a consolidated VIE for which creditors (or beneficial interest holders) do not have recourse to the general credit of the primary beneficiary.