How minority interest is worked out and recorded
For each partly owned company, Finconsol works out the minority share of profit every month from the percentage the parent held in that month. The share is recorded by a journal from the minority interest template, and a second person approves it. The group profit and loss then shows the profit attributable to owners of the parent and to non-controlling interests.
Enter the ownership
- On the group structure, choose Change owner or share for the company.
- Set the parent that owns it and the share held by the parent, as a percentage.
The setup steps for a new group also ask for each company's owner and share.
When the share changes
Under When the group owned it, choose Record a change. Give the month the change takes effect, the percentage bought or sold, and the holding after it. The new percentage applies from that month, and earlier months keep the old one. A change of percentage is recorded in the change log.
How the minority share of profit is worked out
For each partly owned company and each month, the minority share is the company's profit for the month multiplied by the share the parent does not hold. A foreign company's profit is translated at that month's average rate first. The year to date is the sum of the months, so a change in the holding part way through the year is reflected month by month.
For example, if the parent holds 80% and the company makes a profit of 50,000 in a month, the minority share for that month is 10,000.
Record it
- A preparer drafts the journal from the template for the minority's share of profit. Finconsol fills in the amount.
- A second person approves it in Journal entries. An administrator can approve their own entry, and Finconsol then shows that no second person reviewed it.
The Ownership and equity screen shows, for each partly owned company, the share owed, the amount posted, the difference and whether it is posted. If the figures change after posting, the state changes to show that the journal no longer agrees.
Two more templates cover the minority's share of the company's net assets when the group bought it, and its share of the currency translation difference.
Where it appears
The group profit and loss shows the profit for the period, then the part attributable to owners of the parent and the part attributable to non-controlling interests. In Settings you can choose instead to show the net profit after the non-controlling interests' share. On the balance sheet, the minority's share is the Non-controlling interests line in equity.
A company owned through a partly owned company
Finconsol works out the minority share from the holding of the company's direct parent. Where that parent is itself partly owned, the structure screen also shows the group's share through the whole chain, but the minority share of profit still uses the direct holding. Check such a chain with your auditor.