Question

• How did Monsanto Company report its income to noncontrolling (minority) shareholders of consolidated subsidiaries in its 2016 consolidated income statement?

• How did Monsanto Company report its subsidiary noncontrolling (minority) interest in its 2016 consolidated balance sheet?

• Comment on Monsanto’s treatment of its subsidiary noncontrolling interest.

• In 2016, Mosanto had several affiliates that were special-purpose or variable interest entities. What level of ownership did Monsanto have in these entities? Were any of these consolidated? Why?

Answer 1

A) In 2016 it shows as an expense.

B) In 2016 consolidated balance sheet this will be shows as an liabilities.

C) To calculate the non-controlling interest of the balance sheet, take the subsidiaries book value and multiply by the non-controlling interest percentage. For example, if the organization owns 70% of the subsidiary and a minority partner owns 30% and subsidiaries book value is $10M. The non-controlling interest would be calculated as $10M x 30% = $3M. This $3 would be placed on in either a non-current liability (US GAAP) or within equity in it’s own distinct section separate from the rest of the parent’s equity (US GAAP, IFRS).With the issuance of FASB 160 (ASC 810), however, Monsanto’s 2007 treatment became unacceptable. The noncontrolling interest is now required to be treated as an equity item, with the income attributed to the noncontrolling interest treated as an allocation of consolidated net income

D) Monsanto provided customer financing through a lender that was a special purpose entity. Monsanto had no ownership interest in the special purpose entity but did consolidate it because Monsanto effectively originated, guaranteed, and serviced the loans. Neither entity was consolidated because Monsanto was not the primary beneficiary of either entity.