Question

I'm confused about the formula for Minority Interest Sharing Ratio. The formula in my book is:

Minority interest sharing ratio = comprehensive income before MI divided by CSE/(CSE+MI)

Do I use signs (negative or positive to enter into these formulas) or no sign? Please give me an example of using this formula with hypothetical numbers so I can follow how to enter the data.

Thank you

Debra

Answer 1

Firstly, Minority interest is the value of a share, to the shareholders holding less than 50% of the total number of shares. Shareholders holding less than 50% of the total outstanding number of shares are known as minority shareholders.

Let us consider a sample for the same: Co S Inc. generated retained earnings of $ 7000 in 3 years ( Jan 2015 to Jan 2018). Subsequent to the date of acquisition Co S Inc. registered a net profit of $ 48,000 in the 4th year. Therefore, the impact of calculating minority interest is as below:

Total Company S Inc. Minority Interest Equity shares $ 500,000 $400,000 $100,000 Retained earnings: Year 1 $ 150,000 $ 120,000 $ 30,000 Increase in earnings over threes 7.000 $ 5,600 $ 1,400 years Net profit for year 4 $ 48,000 $ 38,400 $ 9,600 Total Shareholders' equity $705,000 $564,000 $ 141,000 Minority interest in Co S Inc has increased from $130,000 on Jan 01st 2015 to $141,000 in Jan 2019, for a period of 4 years span.