Minority Interest


DEFINITION of 'Minority Interest'

1. A significant but non-controlling ownership of less than 50% of a company's voting shares by either an investor or another company.

2. A non-current liability that can be found on a parent company's balance sheet that represents the proportion of its subsidiaries owned by minority shareholders.


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BREAKING DOWN 'Minority Interest'

1. In accounting terms, if a company owns a minority interest in another company but only has a minority passive position (i.e. it is unable to exert influence), then all that is recorded from this investment are the dividends received from the minority interest. If the company has a minority active position (i.e. it is able to exert influence), then both dividends and a percent of income are recorded on the company's books.

2. If ABC Corp. owns 90% of XYZ inc, which is a $100 million company, on ABC Corp.'s balance sheet, there would be a $10 million liability in minority interest account to represent the 10% of XYZ Inc. that ABC Corp does not own.

  1. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  2. Dividend

    A distribution of a portion of a company's earnings, decided ...
  3. Net Operating Income - NOI

    A company's operating income after operating expenses are deducted, ...
  4. Security Interest

    A legal claim on collateral that has been pledged, usually to ...
  5. Consolidate

    The combining of assets, liabilities and other financial items ...
  6. Voting Shares

    Shares that give the stockholder the right to vote on matters ...
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