Curious how this differs between FASB & GAAP:
GAAP allows minority interest: a) under liabilities, or b) a mezzanine section between (but separate from) liabilities and shareholder's equity
FASB allows minority interest only under the shareholder's equity section in a subsection labelled non-controlling interest
Question: Regardless of the accounting practices assets = liabilities + equity still needs to be true. So I am curious which of the following scenarios apply:
i) GAAP: If minority interest is included under liabilities - then to balance the equation - is prorated assets of the minority-owned subsidiaries added to the assets section? (seems kinda odd)
ii) GAAP: If minority interest is included in the mezzanine section is it left out of the equity part in the equation: Assets = liabilities + equity?
iii) FASB: If minority interest is part of shareholder's equity, does that mean that a firm's book value includes minority interest as well? Also, to balance the equation - is prorated assets of the minority-owned subsidiaries added to the assets section? (again, seems kinda odd)
I'm not sure you understand what minority interesy represents. Otherwise the answer would be obvious.
minority interest represents the equity held in consolidated subsidiaries by shareholders other than the consolidating company.
In other words, Company A owns 65% of Company B and therefore has 100% of B's assets and liabilities on its books. But shareholders of Company A do not own 100% of the resulting equity. minority interest accounts for this mismatch.
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