Minority Ownership

Minority ownership is ownership of less than 50% of a company's shares, or insufficient holdings to control the company's operations. From an accounting viewpoint, minority ownership becomes an issue when a company buys more than 50% but less than 100% of another company, and thus there is minority ownership in the new subsidiary. Under GAAP, minority ownership of consolidated subsidiaries appears on the balance sheet between liabilities and shareholders' equity. (While it is possible that minority ownership will have a debit balance, ordinarily minority ownership appears on the right side of the balance sheet.) On the income statement, minority ownership in the income (or loss) of a consolidated subsidiary is shown as a deduction (or addition to) consolidated net income. Note that minority ownership is often called minority interest.