Definition
Minority Interest (Non-Controlling Interest)
Minority interest, now called non-controlling interest, is the share of a subsidiary's equity and profit owned by shareholders other than the parent in consolidated accounts.
When a parent owns more than half but less than all of a subsidiary, consolidation includes 100% of the subsidiary's results, then carves out the portion belonging to outside shareholders as non-controlling interest. It appears separately within equity on the consolidated balance sheet and as a deduction from group profit.
Under Ind AS, the term non-controlling interest replaced minority interest. Analysts deduct it to arrive at profit attributable to the parent's owners, which is the figure used to compute group earnings per share.
Related terms
- GoodwillGoodwill is the premium a company pays to acquire another over the fair value of its identifiable net assets, recorded as an intangible asset.
- Consolidated vs Standalone FinancialsStandalone financials cover only the parent company, while consolidated financials combine the parent with its subsidiaries, joint ventures and associates.
- Shareholders' EquityShareholders' equity is the residual interest in a company's assets after deducting liabilities, comprising share capital, reserves and retained earnings.
- Earnings Per Share (EPS) - Basic vs DilutedBasic EPS divides profit by the existing number of shares, while diluted EPS also counts shares that could be created from options, warrants and convertibles.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.