Minority Interest

AAA

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.

INVESTOPEDIA EXPLAINS '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.

RELATED TERMS
  1. Net Operating Income - NOI

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

    A legal claim on collateral that has been pledged, usually to ...
  3. Non-Controlling Interest

    An ownership stake in a corporation where the held position gives ...
  4. Freeze Out

    An action taken by a firm's majority shareholders that pressures ...
  5. Balance Sheet

    A financial statement that summarizes a company's assets, liabilities ...
  6. Consolidate

    The combining of assets, liabilities and other financial items ...
Related Articles
  1. Knowing Your Rights As A Shareholder
    Investing Basics

    Knowing Your Rights As A Shareholder

  2. What Owning A Stock Actually Means
    Investing Basics

    What Owning A Stock Actually Means

  3. The Buy-Side Of The M&A Process
    Mutual Funds & ETFs

    The Buy-Side Of The M&A Process

  4. Acquire A Career In Mergers
    Professionals

    Acquire A Career In Mergers

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center