Your Ask Joey ™ Answer

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%.


Back To All Questions

You might also be interested in...

  • Discontinued Operations on the FAR CPA Exam

    Overview of Discontinued Operations In financial reporting, discontinued operations refer to a component of a company’s core business or product line that have been divested or shut down. Discontinued operations will be reported (net of tax) separately from continuing operations on the income statement. The reason that discontinued operations are reported separately is so that...

  • Equity Method Excel Workbook

    If you would like to use the Excel workbook that was used to create the Universal CPA lecture on the equity method, please click the link below to download the Excel workbook: Equity Method Lecture Example https://youtu.be/QE4flnmuSkw

  • How Hard is the CPA Exam?

    So you’re thinking about taking the CPA exam? Whether you have a dream of becoming a tax advisor, feel as though you need public accounting experience, or just want to solidify your business acumen, the CPA license is one of the most prestigious and well respected licenses in the business world. The exam itself is...