Note: This is a continuation of the discussion on Wednesday 29 March 2006.

The nature and classification of non-controlling interests in the consolidated balance sheet

Staff noted that respondents did not raise any compelling arguments to classify non-controlling interests in subsidiaries as something other than equity. The Board reaffirmed its previous decision that non-controlling interests in subsidiaries are equity and should be presented in the consolidated balance sheet within equity, separately from the parent shareholders' equity.

Presentation and disclosure of information about changes in controlling ownership interests

The staff informed the Board that most respondents disagreed with the proposals in the NCI exposure draft. Many respondents disagreed that changes in controlling ownership interests should be accounted for as equity transactions. That is because they believe that parent entity shareholders view purchases and sales of non-controlling interests as transactions with third parties that produce significant economic effects that should be recognised in net income/profit or loss. To address respondents' concerns that the proposals in the NCI exposure draft do not adequately address the information needs of parent entity shareholders, the staff proposed the following presentation/disclosure formats for changes in controlling ownership interests:

• Alternative A - Presentation only in the consolidated statement of changes in equity, if presented, otherwise separate note disclosure
• Alternative B - In addition to presentation in the statement of changes in equity, disclosure of a supplementary schedule in the notes to the consolidated financial statements
• Alternative C - Introduce a new statement to the set of consolidated financial statements or disclose at the bottom of the consolidated income statement.

The Board agreed that additional disclosure should be provided and asked the staff to consider other more complex instruments such as puts on minority interests to ensure the proposals capture such instruments adequately.