The following four items are reproduced from Verizon Communications 2012 10-K: its income statement, its balance sheet's stockholders' equity section, its noncontrolling interest section from the statement of changes in stockholders' equity, and its footnotes relating to noncontrolling interests.

Required

a. What are noncontrolling interests and how are they accounted for?

b. The noncontrolling interests relate primarily to a joint venture between Verizon and Vodafone described in the footnote. Why does Verizon consolidate this joint venture rather than to account for its investment using the equity method? What are the financial reporting implications for the decision to consolidate the joint venture?

c. What does the significant amount of net income allocated to the noncontrolling interests imply about the profitability of the wireless subsidiary relative to other subsidiaries in the consolidated entity?

d. What does the "Distributions and other" line with an amount of \(\$(7,254)\) million in the noncontrolling interest portion of the statement of changes in stockholders' equity relate to?

e. How should we treat noncontrolling interests in our return on equity (ROE) computation? Compute ROE for both the Verizon shareholders and for the noncontrolling interests.

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Years Ended December 31 (dollars in millions) Operating revenues Operating expenses Cost of services and sales (exclusive of items shown below)..... Selling, general and administrative expense Depreciation and amortization expense. Total operating expenses. Operating income.... Equity in earnings of unconsolidated businesses Other income and (expense), net.... Interest expense..... Income before (provision) benefit for income taxes... (Provision) benefit for income taxes... Net Income... Net income attributable to noncontrolling interest.... Net income (loss) attributable to Verizon.. Net Income.. 2012 2011 2010 $115,846 $110,875 $106,565 46,275 39,951 16,460 102,686 13,160 324 (1,016) (2,571) 9,897 660 $ 10,557 $9,682 45,875 35,624 16,496 97,995 12,880 444 (14) (2,827) 10,483 (285) $10,198 $ 7,794 44,149 31,366 16,405 91,920 14,645 508 54 (2,523) 12,684 (2,467) $ 10,217 $ 7,668 875 2,404 2,549 $ 10,557 $ 10,198 $ 10.217