What is the interest of the minority?

Interest in a minority represents a situation in which an individual, an individual or company own part of another company equal to less than 50% of their voting shares, otherwise known as common stocks. The accountant suggested it as a way to watch any ownership and control divisions over the company. A company that holds more than 50% of voting shares is referred to as a parent company. The company X still has a control stake in Y because it is a majority shareholder or a parent company. However, fifteen percent are not under the control of X and represents a minority interest of the individual group. This type of arrangement is not unusual, but it must be reflected in the consolidated financial accounting of X, the parent company.

With effect from December 15, 2008, the Council for Financial Accounting Standards (FASB) issued a change to the Research Bulletin (ARB) 51. Before the change was to rEmpire statements included minority interest either for long -term obligations or equity or between these two sections. In most cases, a minority interest was included in the long -term section of the obligations because it was part of the shares of the company that was "owed" to the external entity. Reporting problems in the commitment section are that it is not a real debt, but instead represents a statement of ownership.

with the amendment to FASB decided that the inclusion of a minority share in the shareholder section was a better solution because it provided a clearer idea of ​​what the concept represents. Interest in the minority of the delay of how much society's capital is owned by other entities. Therefore, it fits smoothly into the shareholder section because it concerns the problem of ownership and control, unlike liability or debt.

The aim of the ARB 51 amendment is to improve the comparability of accounting statements between companies. Requires all companies to record minority interestsin a part of the shareholder in the balance sheet to provide uniformity. In fact, the company may have minority interests in several of its subsidiaries, and all this will be added to report the cumulative figure on the consolidated balance sheet of the parent company.