Question

Non-controlling interest (NCI) is the ownership interest of those shareholders who hold shares in a subsidiary that are not owned by the immediate parent or the other group members.

Discuss the implication of reporting NCI as a separate item of owner’s equity.

Answer 1

Yes, Non -Controlling interest is the ownership interest of those share holders who hold shares in a subsidary that are not owned by the immediate parent or the other group members ,

Implication of why NCI is reported as seperate item of owner's Equity

non-controlling interest is not an asset or not a liability as it doesn’t possess the characteristis of either of them. But, since the parent company is not in control of it, hence why it is shown on its own. It is shown in the Consolidated Balance Sheet Under Consolidated Reserves / Earnings.Another significant reason is to protect minority shareholders. Being the minority, the obejective is to ensure that their interests and rights are protected.It assists the iinterested users s in making better decisions as regards the overall entity..It gprovides a true and fair picture to all users of financial statement on the various shareholder’s interest in the company.It is also used while computing various ratios and analyzing financial statements.

Hence Non controlling Interest is a storey between liabilities and Owner 's Equity