If a company owns over 50 percent of another company (subsidiary), the financial statements of the two entities are consolidated into one larger entity. For example, the 2013 financial statements of Verizon Communications Inc. include the financial statements of Verizon Wireless, the cellular phone operator, owned at the time 55 percent by Verizon Communications and 45 percent by Vodafone. Vodafone’s interest in the assets and liabilities reported on Verizon’s balance sheet are represented in an account on the balance sheet called “non-controlling interest” in the amount of approximately $56 billion, which is over 20 percent of Verizon’s total assets. During 2014, Verizon acquired the shares owned by Vodafone; the balance sheet account for non-controlling interest was appropriately reduced on the 2014 statement.

REQUIRED:
a. Explain how non-controlling interest ends up on the balance sheet.
b. Discuss whether it should be classified as an asset, a liability, or a shareholders’ equity item.
c. What other changes were made to the Verizon financial statements due to the transaction with Vodafone?