Recording consolidating adjustments

Globalization has changed the old accounting rule that debits equal credits.

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The amounts of consolidated net income attributable to the parent and to the noncontrolling interest must be clearly identified and presented on the consolidated income statement.

Previously, net income attributable to the noncontrolling interest was generally recorded as an expense or other deduction in calculating consolidated net income.

Some firms experience natural hedging because of the distribution of their foreign currency denominated assets and liabilities.

It is possible for parent companies to hedge with intercompany debt as long as the debt qualifies under the hedging rules.

Consolidated net income is allocated to the parent and noncontrolling interests (minority shareholders) in proportion to their percentages ownership; 80% to Alpha and 20% to the noncontrolling interests, in this case.