Explain what are protective nontrolling rights

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Question - Based on what we have learned in Chapter 1 and in prior accounting classes, plus searching the FASB ASC Topic 810 on consolidation, answer the following questions:

1) Explain what are protective nontrolling rights, and what are substantive participating noncontrolling rights.

2) What noncontrolling rights overcome the presumption that all majority-owned investees should be consolidated?

3) P Company purchases 70% of the voting rights of S company with the remaining 30% noncontrolling interest held by S' former owners, who negotiated the following noncontrolling rights:

a) Any new debt above $1 million must be approved by the 30% noncontrolling shareholders.

b) Any dividends or other cash distributions to owners in excess of customary historical amounts must be approved by the 30% noncontrolling shareholders. According to the FASB ASC, what are the issues in determining whether P should consolidate A or report the investment under the equity method.

Reference no: EM132595098

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