minority interest

System

does anybody know an easy way to remember minority interst calculation. Im really struggling with it and cant understand why it is.


D

System

Re:minority interest

If a parent owns 80% of a subsidiary, the remaining 20% is owned by minority interests.

Scott.

System

Re:minority interest

The only way to remember the minority interest calculation is to adopt a methodical approach. That works for the whole of consolidated accounts questions. If you look in the book it is done the same way every time so with enough question practice you can 'learn' the formula and reproduce it.

I don't think there is an easy answer! I would just suggest getting the revision kit and attacking every consolidated accounts question you can find. If you've already done that - go over every one again!

Annette

System

Re:minority interest

If the profit is £10,000 and the company owns 75% of the subsidiary, then the profit attributable to the minority interest can be calculated as:

(100% - 75%) = 25% x £10,000 = £2,500.

All you are doing is giving the minority interest (the balance of the shareholding) their share of the profit of the subsidiary.

Think of minority interest as a salesman's commission - a salesman will get a %age of the sales in a year/quarter/month. The salesman's commission is essentially the company's minority interest.

Kind regards
Steve

System

Re:minority interest

thankyou all for yours help.i now understand it you made it easy for me.

D

System

Re:minority interest

No problem Dipak. Just remember that to develop your consolidation skills, try and have some sort of your own memory kicks (when I was a student I had the salesman's commission scenario as a kickstart as to what minority interest was and how it was calculated). Some techniques your tuition provider will teach you but sometimes you're better off learning your own.

Kind regards
Steve