Minority interest

Why is Minority interest part of Profit attributable to shareholders of Volkswagen AG in Reading 22, Exhibit 5 - CFA books?

All income statement lines contain 100% of subsidies. So, I think you have to deduct minority interest from the Profit you get (not add).

For me, this holds true only if Profit attributable to shareholders of Volkswagen AG includes subsidies.

Please help me understand this.

Thank you.

When company presents the consolidated income statement, company needs to disclose the total consolidated profit for the year. In case of subsidiaries, when parent company holds more than 50% but less than 100%, it becomes controlling interest to extent of its holding and balance stakeholders (100 - % holding by parent co) becomes minority interest.

Consolidation is adopted line by line for each individual item of Income statement and Financial Position. In the mentioned exhibit 5, volkswagen has subsidiary in which total holding of volkswagen in subsidiary is less than 100%.

In case wherein subsidiary has profits: Attributtable to shareholders = Total consolidated profit (profit after tax) - allocation of profit to minorty shares (based on % holding of minority)

In case wherein subsidiary has losses: Attributtable to shareholders = Total consolidated profit (profit after tax) + allocation of losses to minorty shares (based on % holding of minority)

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Thank you very much, but I still dont get it.

Could you please use numbers for Volkswagen in your explanation?

Total income tax expense for 2009 was €349 million, resulting in profit after tax (net income) of €911 million - mentioned amount is consolidated profit for the volkswagen group.

Losses attributable to minority interest ownership in Volkswagen subsidiary companies, €49 million Amounts attributtable to shareholders of the volkswagen = 911+49 = 960 million

Ok, but why is 49 attributable to shareholders of Volkswagen? Your formula from above says minus…not plus…

They do not have any part in 49. Right?

Thanks!

I think 49 is non-controling interest profit and it should not be part of profit attributable to Volkswagen. That’s all.

Please help me understand this. I think Exhibits 1 and 2 in Reading 25 support my argument.

Volkswagon consolidated (100%) the income statements of one or more subsidiaries in which it has less than 100% ownership.

Subtracting the minority interest in the subsidiaries’ net income corrects for the overstatement from 100% consolidation.

Exactly. But isn’t 911 (not 960) consolidated profit from which you have to subtract 49? If 911 includes consolidated lines, then I assume you have to subtract from 911 (not add). Thanks.