What is Minority Interest Accounting?
Minority interest, called non-controlling interest (NCI) under IFRS, is the portion of equity in a subsidiary not attributable to the parent company. It is presented within consolidated equity, separate from the parent’s shareholders’ equity, and is allocated a share of the subsidiary’s profit and other comprehensive income.
How It Works
- At acquisition, measure NCI either at fair value or at the proportionate share of the subsidiary’s identifiable net assets.
- Allocate each period’s profit or loss between parent and NCI based on ownership percentage.
- Show NCI as a separate line item within consolidated equity.
- Disclose NCI movements during the year, including dividends paid to non-controlling shareholders.
Saudi Context
Saudi conglomerates with partially owned subsidiaries, joint ventures, and family-held operating companies disclose NCI under IFRS 10. The Capital Market Authority requires Tadawul-listed groups to show NCI separately to give investors a true picture of the parent’s stake.
Example
A Saudi parent owns 80% of a Riyadh-based subsidiary. The subsidiary earns SAR 5 million net profit. SAR 4 million is attributed to the parent and SAR 1 million to NCI in the consolidated income statement.