Expert: Don Sadler - 7/31/2006

Question
I, a Japanese, often come across in consolidated balance sheets the following two expressions:

 Minority interests (in subsidiaries)

 Minority interest (in subsidiaries)

One is in singular and the other in plural.

1.  Which is more appropriate from both financial and English perspectives?

2.  If both are correct, please explain.

Thank you,

Answer
Often one company (Company A) will acquire the majority of stock of a public corporation (Company B) that also has one or more other people or companies with ownership interests.  So, for example, if Company A owns 80% of Company B stock, Company B is considered a subsidiary of Company A.  When Company A prepares financial statements, it consolidates Company B’s financial statements.  This shows 100% of Company B revenues, expenses, assets and liabilities.  However, since Company A only owns 80% of Company B, the minority interest (the 20% owned by other people of companies) must be considered and disclosed in the financial statement.

In this case, Company A has an offset for the 20%, expressed as a single line item, for minority interest in net profit, and a single line item offset in the equity section to adjust the holding value to deduct the net book value by the 20% figure as well.

I don't think any one expression (Minority interest or Minority interests) is more correct than the other.  GAAP (Generally Accepted Accounting Principles) does not require specific account titles, just clarity.  If there is only one subsidiary, the singular (Minority interest) is more appropriate, and if there is more than one, the plural (Minority interests) would be clearer.  It is also possible to have a situation where each subsidiary has “minority interest” separately listed.

Finally, there is one last consideration…. in America, there are many people that have English as a mother language yet they do not use the language correctly so there sometimes there are small mistakes.

I hope this is helpful to you.  Here is a link to additional information

http://www.answers.com/"minority+interest"?gwp=11&ver=2.0.0.453&method=3