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What is minority interest?
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Answer Posted / rooney
It represents shares owned by third parties when Company A
acquires Company B. In other words, minority interest
represents the equity interest of outside shareholders in
consolidated subsidiaries. Under GAAP, if Company A owns
50% or more of Company B, the two companies are treated as
if they were one for financial statement purposes. Thus an
account namely, minority interest must be presented to
indicate that not all the assets and liabilities are
related to Company A, the parent company. Minority interest
ordinarily appears on the balance sheet between liabilities
and shareholders equity. On the income statement, minority
interest in the income of a consolidated subsidiary is
shown as a deduction of consolidated net income. If Company
A has a minority interest of less than 50% in Company B,
then minority interest does not appear on the balance sheet
or income statement of Company A, and other methods are
used to account for its minority interest.
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