Equity Before Minority Interest

Category

Balance Sheet

Units

Currency

US-GAAP elements

StockholdersEquityStockholdersEquityIncludingPortionAttributableToNoncontrollingInterest

Reference

Regulation S-X Rules 5-02.28 through 5-02.31; ASC 810

Source

Reported in SEC EDGAR filings (US-GAAP XBRL taxonomy)

Equity before minority interest is the stockholders' equity that belongs to the parent company's own shareholders, leaving out the share of consolidated subsidiaries owned by outside investors. It includes preferred and common stock, additional paid-in capital, retained earnings, accumulated other comprehensive income, and treasury stock, but excludes noncontrolling interest.

When a parent consolidates a subsidiary it does not fully own, it reports all of the subsidiary's assets and liabilities. The slice of the subsidiary's equity owned by others is noncontrolling interest, formerly called minority interest. Removing it leaves the equity the parent's shareholders actually own.

ASC 810, which adopted the requirements of SFAS 160, requires noncontrolling interest to be reported within equity but separately from the parent's equity. Consolidated balance sheets therefore show a subtotal for equity attributable to the parent, tagged StockholdersEquity in XBRL, followed by noncontrolling interest and a grand total tagged StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest. The SEC taxonomy notes that StockholdersEquity excludes temporary equity and is sometimes called permanent equity.

Regulation S-X Rules 5-02.28 through 5-02.30 set out the parent's equity captions: preferred stock that is not mandatorily redeemable, each class of common stock, and other stockholders' equity, which covers additional paid-in capital, retained earnings, and accumulated other comprehensive income. Rule 5-02.31 is the caption for noncontrolling interests in consolidated subsidiaries. Preferred stock that must be redeemed, or whose redemption is outside the company's control, is presented under Rule 5-02.27 outside stockholders' equity and is not part of this figure.

This is the equity figure that matches earnings attributable to the parent, which makes it the right denominator for return on equity and the starting point for book value per share. Using total equity instead can overstate a shareholder's claim at companies with large partly owned subsidiaries, such as some utilities, real estate groups, and holding companies. For common-equity measures, preferred stock is subtracted as well.