Noncontrolling Interest (also called Minority Interest) on a balance sheet represents which of the following when you own more than 50% but less than 100% of another company?

Noncontrolling Interest (also called Minority Interest) on a balance sheet represents which of the following when you own more than 50% but less than 100% of another company?

• A. The portion you own
• B. The portion you do not own
• C. The company's cash balance
• D. The company's debt

Answer: (B)

Noncontrolling interest is the minority share of a subsidiary’s equity that belongs to shareholders other than the parent. When you own more than half but not all of a subsidiary, there are still other owners who hold a stake in that subsidiary. That stake is shown on the consolidated balance sheet as a separate line in equity, representing the portion of the subsidiary’s net assets that belong to those outside owners. It moves with the subsidiary’s net income or losses and with any distributions, in proportion to their ownership. It isn’t the cash balance or the debt of the company, which are assets and liabilities, respectively. And it isn’t the portion you own, which is the parent’s share.

Noncontrolling interest is the minority share of a subsidiary’s equity that belongs to shareholders other than the parent. When you own more than half but not all of a subsidiary, there are still other owners who hold a stake in that subsidiary. That stake is shown on the consolidated balance sheet as a separate line in equity, representing the portion of the subsidiary’s net assets that belong to those outside owners. It moves with the subsidiary’s net income or losses and with any distributions, in proportion to their ownership.

It isn’t the cash balance or the debt of the company, which are assets and liabilities, respectively. And it isn’t the portion you own, which is the parent’s share.