Noncontrolling Interest

Category

Balance Sheet

Units

Currency

US-GAAP elements

MinorityInterestRedeemableNoncontrollingInterestEquityCarryingAmount

Reference

Regulation S-X Rule 5-02.31 (Noncontrolling interests in consolidated subsidiaries); ASC 810

Source

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

Noncontrolling interest is the portion of a consolidated subsidiary's equity that is owned by investors other than the parent company. When a parent controls a subsidiary without owning all of it, it includes 100 percent of the subsidiary's assets and liabilities in its own statements, and noncontrolling interest records the outside owners' share of the subsidiary's net assets.

It was long called minority interest. The term changed to noncontrolling interest with SFAS 160, now part of ASC 810, which also moved the balance into equity rather than presenting it between liabilities and equity.

ASC 810 requires noncontrolling interest to be reported within equity on the consolidated balance sheet, separately from the parent's own equity. In XBRL filings the balance is tagged MinorityInterest, which the SEC taxonomy labels stockholders' equity attributable to noncontrolling interest. The balance changes each period by the outside owners' share of the subsidiary's income, less distributions paid to them, and by transactions in which the parent buys or sells stakes without giving up control; those are recorded within equity rather than as gains or losses.

Regulation S-X Rule 5-02.31 is the balance-sheet caption for noncontrolling interests in consolidated subsidiaries. It also requires a note stating the amount represented by preferred stock and its dividend requirements when that preferred stock is material relative to consolidated equity. Some noncontrolling interests can be redeemed by their holders or on events outside the parent's control; the SEC requires those to be presented outside permanent equity, in temporary or mezzanine equity, where they are tagged RedeemableNoncontrollingInterestEquityCarryingAmount.

Analysts need to handle noncontrolling interest consistently. Because consolidated revenue, EBITDA, and debt include the whole subsidiary, enterprise value calculations commonly add noncontrolling interest so that the numerator and the denominator cover the same business. Per-share and return-on-equity measures, on the other hand, should use equity and earnings attributable to the parent only. The balance is usually carried at book value, which can be far below what the outside stake would be worth at market.