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Querry on Holding Company

work is worship (Service) (2728 Points)

31 January 2010

Hi.. Under which head will we show minority interest in consolidated balance sheet of a holding company.

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9 Replies

triumph-CMA (Chartered Accountant) (503 Points)
Replied 31 January 2010

Minority interest is shown under the head SHARE CAPITAL in consolidated Balance Sheet.

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Amir (Learner) (4016 Points)
Replied 31 January 2010

Dear Subra,

Minority Interest is aliability for holding company..

Minority Interst appears as a separate item on Liabilty side after "Loans" in the consolidated Balance sheet.

triumph-CMA (Chartered Accountant) (503 Points)
Replied 31 January 2010

Dear Amir, the minority interest is a share of minority share holders in the subsidiary which consists of 1. capital, and 2. pre acquisition & post acquisition profits. How can you show the capital of company as current liabilty. please give reasons. In anticipation of your reply.

Amir (Learner) (4016 Points)
Replied 31 January 2010

Dear Djirendra Singh,

AS -21 requies Minority Interest to be disclosed separately from companies equity & Liabilities..

Further, for Holding Company or for Consolidation purposes it is just a liability towards the shareholders of subsidary & not the "Share capital or Reserve /Surplus"

If my earlier reply causing confusion in terms of it;s presentation then I will modify it but I simply meant that it is a liability..

work is worship (Service) (2728 Points)
Replied 31 January 2010

Thanks Dhirender, your second explanation has cleared my doubts ..

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Varun (ACA CS Final Pass B.Com(H)) (270 Points)
Replied 31 January 2010

as understood by me, 'minority interest' simply represents that part of net assets of subsidiary which are not owned by holding company, but are under its control due to ownership of more than half of share capital of subsidiary.

While preparing consolidated B/S, we club the net assets of subsidiary with holding at their full 100% value, irrespective of the %age of holding (i.e. no matter we have only say 80% investment in subsidiary, we still add the 100% value of its net assets to the assets of holding co.). To counter it, now we show the rest 20% value of net assets of subsidiary as minority interest at liability side.

We calculate the minority interest as sum total of share capital and its pre-post acquisition profits, just for sake of easy and quick calculation. Otherwise these are just the 20% net assets of subsidiary which we do not own but have control over due to significant interest in subsidiary. It can also be calculated from asset side.

Minority Interest appears below 'unsecured loan' and above 'current liabilities' in consolidated B/S.

Please correct me, if I am wrong anywhere.

Thanks!!