How to calculate minority interest in consolidated b/s?

Anamikaa,

minority interest is the share of the shareholders other than the holding company. the MI is the their share in the equity capital, general reserves, p/l account.

Sir... Thanx 4 ur reply........i knw dis thing....

i want d calculation........... wid example...........

Minority interest is the share in Net Assets (Share Capital+Reserves) of Subsidiary which are not owned but controlled by the Parent (Holding) Company. 

I am uploading a very basic example on calculation of minority interest in consolidation of accounts.

Hope you find it useful.

Best Regards

ASHISH PATHAK

Say Balance Sheet looks like this:

Eq. SC 5,00,000

P/L (b/f) 1,00,000

p/l (CY) 50,000

GR (b/f) 10000 (no further additions)

 Holding co holds 75%. thus MI share is 25%

MI will be

1,25,000 + 25,000 + 12,500 + 2,500 i.e. 25% of the above

plus, there may be further adjistments, such as write off of the unreaqlised profit on stock etc

Thanx Ashish ji n Ankit ji for ur reply...............

I required d adjustments of further things while calculating

minority interest.....

such as dividend, stock, unrealised profit, pre acquisition n

post acquistion profit, etc,.........

hello Anamika, 

It's bit difficult to explain all these adjustments here. I'd suggest you to refer any good book for understanding the treatments of these adjustments or if possible for you to get parveen sir's notes you may easily understand these adjustments from the tuition notes of Parveen Sharma Sir.

hmmmm........

i required dis thing to complete my Company B/s today itself....

I understand it is difficult to explain here....

Thanx 4 ur reply....

Anamikaa,

it can be explained if you ask say a specific adjustment...so if you want the treatment of a specific adjustment, then it can be explained

Meaning and definition of minority interest

Also referred as Non-controlling interest in business, minority interest is an accounting concept that deals with the part of a subsidiary corporation’s stock which is not owned by the parent corporation. Moreover, the enormity of the minority interest in the subsidiary company is usually less than 50% of outstanding shares, or the corporation would normally stop being a subsidiary of the parent corporation.

To define in a more elaborate manner, minority interest can be explained as a significant but non-controlling ownership of less than 50% of the voting shares of a company by an investor or another company. Also, it can be referred as a non-current obligation which can be found on the balance sheet of the parent company which represents the amount of subsidiaries owned by minority shareholders.

As explained by Investopedia, in accounting terms, if minority interest is owned by a company in another but is not able to exert influence, i.e. holds a minority passive position, then all the info recorded from this investment includes dividends obtained from the minority interest. Moreover, if the company is capable of exerting influence, i.e. holds a minority active position, then the dividends as well as a percent of income are recorded on the books of the company.

Example of minority interest

Let us presume that XYZ Corp. owns 90% of ABC Inc., which is a $100 million company. The XYZ Corp., on its balance sheet would have $10 million liability in minority interest account thus representing the 10% of ABC Inc. which is not owned by the XYZ Corp.

Calculating the minority interest on an Income statement

The value of minority interest is calculated using the percentage of minority interest and the value. The main steps included are:

• Note down the total value of the subsidiary company same as it is shown on the balance sheet of the company.
• Multiply the subsidiary value by the percentage owned by other parties. For instance, if the subsidiary value is $5,000,000 and 10% of this is owned by other, the value of the minority interest then would be $500,000.
• Note down the value of minority interest under the section “shareholder’s equity” in the balance sheet. 

RECOGNIZING A MINORITY INTEREST

IN CONSOLIDATED FINANCIAL STATEMENTS--- Read Carefully Attach file for the same... hope your dout solved....

Have a Nice day....

Thanx Sir ....

Hi,

During the year the Holding company has acquired new shares out of new issue of shares which reduced the minority share. Now while calculating minority interest do we need to share profits up to date of new acquisition in old ratio and after that in the new ratio OR entire profits in the new ratio

Company acquired at face value .... it is like preferential allotment... Only holding company acquired shares... 

PLZZ help me in this regard...