Noncontrolling interest (NCI) represents the portion of a subsidiary’s ownership that is held by shareholders other than the parent company. It reflects their claim on the subsidiary’s net assets and share of its profits. In simple terms: NCI is just the part of a company you don’t own. Imagine you buy 80% of a small company. The other 20% is owned by someone else—that’s the NCI. Why it appears under shareholders’ equity: Although the parent company consolidates the subsidiary’s assets and liabilities on its balance sheet, it does not own 100% of the subsidiary. The NCI represents the portion of equity that belongs to the minority shareholders, so it is shown as a separate line within the equity section of the consolidated balance sheet.
Learn Noncontrolling Interest (NCI) with interactive examples and practice exercises in our Learn the core concepts behind M&A. module.
This interactive learning module helps you understand Noncontrolling Interest (NCI) through hands-on practice and real-world examples.