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3.6 Noncontrolling interests
Publication date: 27 May 2020
us NFP guide
When an NFP owns less than 100% of a consolidated for-profit subsidiary, the other owners are referred to as noncontrolling shareholders. Additionally, in some situations, an NFP HCO may have attributed a portion of the net assets of a consolidated NFP subsidiary to a noncontrolling interest (see NP 5.2.5). ASC 958-810 tailors the general guidance for reporting noncontrolling interests in subsidiaries (ASC 810-10-45-15 through ASC 810-10-45-21) to the NFP reporting model.
Purchases or sales of shares between the NFP parent and the noncontrolling shareholders are considered equity transactions and should be displayed separately. See NP 3.4.8.
ASC 958-810-55-17 through ASC 958-810-55-25 provide a comprehensive example of NFP financial statements that illustrates the presentation and disclosure requirements for noncontrolling interests. With respect to the statement of activities or statement of operations, ASC 958-810-50-4 requires a schedule of changes in consolidated net assets attributable to the parent and the noncontrolling interest. This is similar to the reconciliation of the beginning and ending balances of net assets attributable to the parent and noncontrolling interest that business entities are required to present pursuant to ASC 810-10-50-1A.
An NFP (parent) that has one or more consolidated subsidiaries with a noncontrolling interest shall provide a schedule of changes in consolidated net assets attributable to the parent and the noncontrolling interest either in notes to the consolidated financial statements or on the face of financial statements, if practicable. That schedule shall reconcile beginning and ending balances of the parent’s controlling interest and the noncontrolling interests for each class of net assets for which a noncontrolling interest exists during the reporting period.
Excerpt from ASC 958-810-50-5
The schedule shall, at a minimum, include:
- A performance indicator, if the entity is a not-for-profit, business-oriented health care entity
- Amounts of discontinued operations
- Not used
- Changes in ownership interests in a subsidiary, including investments by and distributions to noncontrolling interests acting in their capacity as owners, which shall be reported separate from any revenues, expenses, gains, or losses and outside any measure of operations, if reported
- An aggregate amount of all other changes in net assets without donor restrictions and net assets with donor restrictions for the period.
This schedule reconciles beginning and ending balances of the parent’s controlling interest and the noncontrolling interests for each class of net assets for which a noncontrolling interest exists. It is either displayed on the face of the statement or provided in the notes.
Unlike business entities, NFPs are not required to separately present amounts for the parent and the noncontrolling interest on the face of the statement of activities or the statement of operations. Only the rollforward schedule is required. If an NFP HCO wishes to display the performance indicator and the change in net assets without donor restrictions on the face of the statement of operations in a manner similar to a business entity, such a presentation could be modeled on the guidance for business entities that present a single continuous statement of comprehensive income. FSP 4.4.2 provides an example of such reporting by a business entity.
Figure NP 3-11 illustrates this rollforward for an NFP that does not report a performance indicator (and is not reporting discontinued operations or changes in ownership interests).
Figure NP 3-11
Schedule of changes in consolidated net assets attributable to the parent and the noncontrolling interest (no performance indicator)
Schedule of changes in consolidated net assets attributable to the parent and the noncontrolling interest (no performance indicator)
Changes in consolidated net assets without donor restrictions attributable to NFP parent
| |||||
Total
| Controlling interest
| Noncontrolling interest
| |||
Balance, July 1, 20X0
| $400,000
| $320,000
| $80,000
| ||
Changes in net assets without donor restrictions
| 50,000
| 40,000
| 10,000
| ||
Balance, June 30, 20X1
| $450,000
| $360,000
| $90,000
| ||
Changes in net assets without donor restrictions
| 20,000
| 16,000
| 4,000
| ||
Balance, June 30, 20X2
| $470,000
| $376,000
| $94,000
| ||
Figure NP 3-12 is an example for an NFP HCO that reports a performance indicator derived from ASC 958-910-55-25. No purchases or sales of shares between the parent and noncontrolling shareholders occurred during these periods.
Figure NP 3-12
Schedule of changes in consolidated net assets attributable to the parent and the noncontrolling interest (with performance indicator)
Schedule of changes in consolidated net assets attributable to the parent and the noncontrolling interest (with performance indicator)
Changes in consolidated net assets without donor restrictions attributable to NFP parent
| ||||||
Total
| Controlling interest
| Noncontrolling interest
| ||||
Balance, July 1, 20X0
| $400,000
| $320,000
| $80,000
| |||
Excess of revenues over expenses (from continuing operations)
| 23,000
| 18,400
| 4,600
| |||
Discontinued operations, net of tax
| (7,000)
| (5,600)
| (1,400)
| |||
Other changes
| 15,000
| 12,000
| 3,000
| |||
Changes in net assets without donor restrictions
| 31,000
| 24,800
| 6,200
| |||
Balance, June 30, 20X1
| $431,000
| $344,800
| $86,200
| |||
Excess of revenues over expenses
| 29,000
| 23,200
| 5,800
| |||
Other changes
| 5,000
| 4,000
| 1,000
| |||
Changes in net assets without donor restrictions
| 34,000
| 27,200
| 6,800
| |||
Balance, June 30, 20X2
| $465,000
| $372,000
| $93,000
| |||
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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