Understanding Minority Interests
Minority interest is an important factor to consider in a parent company's balance sheet, as it can tell us how much of a controlling interest the parent company has in its subsidiary, ranging from 50% to 100%.Formula
Minority Interest = (Non-controlling Interest Equity/Total Equity) x Total EquityHow do I calculate the minority interest?
It is important to calculate Minority Interest to ensure that all stakeholders are accurately represented in the balance sheet. To calculate Minority Interest, first determine the Total Equity of the Parent Company by subtracting Total Liabilities from Total Assets. Then, calculate the Minority Interest percentage by dividing the Minority Interest amount from the Total Equity. To determine the Minority Interest amount, use the following formula: Minority Interest = (Non-controlling Interest Equity/Total Equity) x Total Equity. Sourcetable can be used to easily calculate Minority Interest.
What is a controlling interest?
A controlling interest is when a parent company owns 50% to 100% of a subsidiary.
What does minority interest mean?
Minority interest is a term used to describe the ownership of a company by someone other than the parent company.
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Key Points
How do I calculate minority interest?
Minority Interest = (Non-controlling Interest Equity/Total Equity) x Total Equity
Parent Company has Controlling Interest
When a parent company owns at least 50% of a subsidiary, it has a controlling interest in that subsidiary. This means that the parent company has the power to make decisions regarding the subsidiary's operations and finances.
Financial Results Consolidated
The parent company consolidates the financial results of the subsidiary into its own reports. This means that the parent company will include the financial results of the subsidiary into its own financial reports. This allows for a more accurate picture of the parent company's financials.
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