(v1720.00) Minority Interest

If the company you are analyzing (Company A) owns more than 50% but less than 100% of another company (Company B), it typically consolidates the financial statements of the two entities. To recognize that a portion of the combined company's income and assets do not belong to the shareholders of Company A, the account Minority Interest (v1720, v2780) appears on both the Income Statement (as a deduction) and on the Balance Sheet (as equity). Enter Minority Interest (v1720.00) as an after-tax amount.

For example, assume Company A owns 60% of Company B, and Company A produces consolidated financial statements combining the two companies. All of Company B’s earnings ($20 million) and equity ($100 million) are included in Company A’s Income Statement and Balance Sheet. But because Company B's other shareholders own 40% of the earnings and equity contributed by Company B, Minority Interest (v1720.00), is calculated and recorded as 40% of the $20 million of Company B’s earnings or $8 million.