Minority interest - wikipedia Minority interest Accounting Historical cost Constant purchasing power Management Tax Major types Auditing Cost Forensic Financial Fund Governmental Management Social Tax Key concepts Accounting period Accrual Constant purchasing power Economic entity Fair value Going concern Historical cost Matching principle Materiality Revenue recognition Unit of account Selected accounts Assets Cash Cost of goods sold Depreciation / Amortization Equity Expenses Goodwill Liabilities Profit Revenue Accounting standards Generally - accepted principles Generally - accepted auditing standards Convergence International Financial Reporting Standards International Standards on Auditing Management Accounting Principles Financial statements Annual report Balance sheet Cash - flow Equity Income Management discussion Notes to the financial statements Bookkeeping Bank reconciliation Debits and credits Double - entry system FIFO and LIFO Journal Ledger / General ledger T accounts Trial balance Auditing Financial Internal Firms Report People and organizations Accountants Accounting organizations Luca Pacioli Development History Research Positive accounting Sarbanes -- Oxley Act Business portal In accounting, minority interest ( or non-controlling interest ) is the portion of a subsidiary corporation 's stock that is not owned by the parent corporation. The magnitude of the minority interest in the subsidiary company is generally less than 50 % of outstanding shares, or the corporation would generally cease to be a subsidiary of the parent. It is, however, possible ( such as through special voting rights ) for a controlling interest requiring consolidation to be achieved without exceeding 50 % ownership, depending on the accounting standards being employed. Minority interest belongs to other investors and is reported on the consolidated balance sheet of the owning company to reflect the claim on assets belonging to other, non-controlling shareholders. Also, minority interest is reported on the consolidated income statement as a share of profit belonging to minority shareholders. The reporting of ' minority interest ' is a consequence of the requirement by accounting standards to ' fully ' consolidate partly owned subsidiaries. Full consolidation, as opposed to partial consolidation, results in financial statements that are constructed as if the parent corporation fully owns these partly owned subsidiaries ; except for two line items that reflect partial ownership of subsidiaries : net income to common shareholders and common equity. The two minority interest line items are the net difference between what would have been the common equity and net income to common, if all subsidiaries were fully owned, and the actual ownership of the group. All the other line items in the financial statements assume a fictitious 100 % ownership. Some investors have expressed concern that the minority interest line items cause significant uncertainty for the assessment of value, leverage and liquidity. A key concern of investors is that they can not be sure what part of the reported cash position is owned by a 100 % subsidiary and what part is owned by a 51 % subsidiary. Minority interest is an integral part of the enterprise value of a company. The converse concept is an associate company. Contents 1 Accounting treatment 2 See also 3 References 4 External links Accounting treatment Under the International Financial Reporting Standards, the non-controlling interest is reported in accordance with IFRS 5 and is shown at the very bottom of the Equity section on the consolidated balance sheet and subsequently on the statement of changes in equity. Under US GAAP minority interest can be reported either in the liabilities section, the equity section, or the mezzanine section of the balance sheet. The Mezzanine section is located between liabilities and equity. FASB FAS 160 and FAS 141r significantly alter the way a parent company accounts for non-controlling interest ( NCI ) in a subsidiary. It is no longer acceptable to report minority interest in the mezzanine section of the balance sheet. See also Associate company ( the converse concept ) Articles of incorporation Business valuation Consolidation ( business ) Drag - along right Equity method Pre-emption right Share capital Tag - along right Voting interest References Jump up ^ http://www.groco.com/readingroom/bus_dloc_mid.aspx. The Minority Interest Discount Jump up ^ http://eumedion.nl/en/public/knowledgenetwork/position-papers/position_paper_full_consolidation_of_partly_owned_subsidiaries_requires_additional_disclosure.pdf. Position paper by corporate governance forum ' Eumedion ' External links Minority Interest Minority Interest at Investopedia.com Minority Interests on the Income Statement -- The Cost Method, Equity Method, and Consolidated Method Minority Interests on the Balance Sheet Corporate finance and investment banking Capital structure Convertible debt Exchangeable debt Mezzanine debt Pari passu Preferred equity Second lien debt Senior debt Senior secured debt Shareholder loan Stock Subordinated debt Warrant Transactions ( terms / conditions ) Equity offerings At - the - market offering Book building Bookrunner Corporate spin - off Equity carve - out Follow - on offering Greenshoe Reverse Initial public offering Private placement Public offering Rights issue Seasoned equity offering Secondary market offering Underwriting Mergers and acquisitions Buy side Control premium Demerger Divestment Drag - along right Management due diligence Managerial entrenchment Minority discount Pitch book Pre-emption right Proxy fight Post-merger integration Sell side Shareholder rights plan Special - purpose entity Special situation Squeeze out Staggered board of directors Stock swap Super-majority amendment Tag - along right Takeover Reverse Tender offer Leverage Debt restructuring Debtor - in - possession financing Financial sponsor Leveraged buyout Leveraged recapitalization High - yield debt Private equity Project finance Valuation Accretion / dilution analysis Adjusted present value Associate company Business valuation Conglomerate discount Cost of capital Weighted average Discounted cash flow Economic Value Added Enterprise value Fairness opinion Financial modeling Free cash flow Free cash flow to equity Market value added Minority interest Modigliani -- Miller theorem Net present value Pure play Real options Residual income Stock valuation Sum - of - the - parts analysis Tax shield Terminal value Valuation using multiples List of investment banks Outline of finance Retrieved from `` https://en.wikipedia.org/w/index.php?title=Minority_interest&oldid=780744824 '' Categories : Corporate law Corporate finance Financial capital Mergers and acquisitions Shareholders Talk Contents About Wikipedia Español فارسی עברית 日本 語 Русский 中文 Edit links This page was last edited on 16 May 2017, at 22 : 54. 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Question: what is minority interest on a balance sheet
Answer: the claim on assets belonging to other, non-controlling shareholders