Question

why is non controlling interest included in the equity if non controlling interest is not attributable to the shareholders? And which part in assets section records this portion in accordance to dual effects?

Answer 1

Non controlling interest - The portion of a subsidiary corporation's stock that is not owned by the parent company is called non controlling interest. It is generally less than 50% of outstanding shares.

It is included in the equity section because it reflects the non controlling shareholders' claim on assets.

In accordance with duel effects the accounting treatment for non controlling interest is as follows:

According to Generally Accepted Accounting Principles-

Accounting treatment in the consolidated balance sheet - The non controlling interest is to be recorded either non current liability or as a part of equity section in the balance sheet of the parent company.

And, the the accounting treatment in the consolidated income statement - It must be clearly identified the amount of net income attributable to the parent company and to the non controlling interest.

For example: