The portion of a subsidiary's equity and profit that is not owned by the parent company in consolidated financial statements.
When a parent company owns more than 50% but less than 100% of a subsidiary, the remaining ownership percentage belongs to minority (non-controlling) shareholders. In consolidated financial statements, 100% of the subsidiary's assets, liabilities, revenue, and expenses are included, but the portion belonging to minority shareholders is shown separately. Under Ind AS 110, Non-Controlling Interest is presented within equity (not as a liability) on the consolidated balance sheet, and the minority's share of profit is shown separately in the consolidated P&L.
Parent owns 75% of a subsidiary with net assets of ₹40,00,000 and PAT of ₹10,00,000. Minority Interest on Balance Sheet: ₹40,00,000 × 25% = ₹10,00,000 (shown in equity section). Minority share of profit: ₹10,00,000 × 25% = ₹2,50,000 (shown separately in consolidated P&L). Parent's share of profit: ₹7,50,000.
Ensures accurate financial reporting and record-keeping
Helps maintain regulatory and tax compliance
Enables better-informed business decisions
Improves operational efficiency and cash flow management
Under Ind AS 110/IFRS 10, Non-Controlling Interest represents ownership — minority shareholders are owners of the group, not creditors. They share in profits, losses, and net assets. Showing NCI in equity correctly reflects the economic reality that these shareholders have a residual claim on assets, not a fixed debt obligation.
Earnings Per Share uses only the PARENT's share of consolidated profit (after deducting minority interest). So if consolidated PAT is ₹10 crore and minority interest is ₹2 crore, EPS is calculated on ₹8 crore divided by parent's outstanding shares. The minority portion doesn't dilute parent's EPS.
Formal records of a business's financial activities, comprising the Balance Sheet, Profit & Loss Statement, Cash Flow Statement, and Notes to Accounts.
The residual interest in the assets of a business after deducting all its liabilities. Also called owner's equity, net worth, or shareholders' equity.
Financial transactions between two entities that belong to the same parent company or corporate group.
An intangible asset representing the excess purchase price paid during an acquisition over the fair value of the target company's identifiable net assets.
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