How to calculate noncontrolling interest?
Noncontrolling interest (“NCI”), which is also known as minority interest, occurs when a company acquires more than 50% but less than 100% of the equity of another company. This is important because under the acquisition/consolidation method, a portion of the financial results cannot be claimed by the parent since they do not own 100% of the entity. They must attribute the portion that they do not own to the minority interest owners.
For example, let’s say that Maui acquires a 70% stake in Kona. Maui would have controlling interest of 70% and noncontrolling interest of 30%.
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