Non-Controlling Interests — Attributing Net Income and OCI between Parent and NCI

Graziano Stefanelli
7 hours ago
3 min read

In consolidated financial statements, total comprehensive income must be clearly split between the parent company and the non-controlling interest (NCI).

This attribution ensures that the consolidated figures reflect each party’s rightful economic stake in the group’s financial performance and equity movements.

1. Why attribution is required

When a parent owns less than 100% of a subsidiary, it must present both:

The total consolidated income of the group.
The portion attributable to NCI — representing the economic interests of minority shareholders.

This attribution is required for:

Net income or loss
Other comprehensive income (OCI)
Total comprehensive income

2. Presentation in the financial statements

Income statement (or statement of profit or loss):

Line item	Reported As
Net income	Total for the group
Less: Net income attributable to NCI	Separate line, shown below net income
Net income attributable to parent	Final subtotal, reported as bottom-line earnings

Statement of comprehensive income:

Total OCI must also be split into:

OCI attributable to parent
OCI attributable to NCI

Balance sheet:

The cumulative result of NCI’s share of profit, OCI, and dividends is reflected in consolidated equity under “Non-controlling interests.”

3. Items subject to attribution

Component	Attribution Basis
Subsidiary net income	Based on percentage of ownership
Foreign currency translation	Share of OCI allocated to NCI
FVOCI financial assets (investee)	Proportional attribution of revaluation
Actuarial gains/losses (pension plans)	NCI’s share allocated based on plan participation

All intra-group eliminations and consolidation adjustments are applied before the attribution calculation.

4. Example — Attribution of net income and OCI

Scenario:

Parent owns 75% of Subsidiary ASubsidiary A reports:

Net income = $4 million
OCI (cash-flow hedge gain) = $600,000

Attribution:

Net income to NCI = 25% × $4M = $1M
OCI to NCI = 25% × $600K = $150K

Statement of comprehensive income:

Net income: $4M
OCI: $600K
Total comprehensive income: $4.6M
- Attributable to NCI: $1.15M
- Attributable to parent: $3.45M

5. Journal entries to reflect NCI share

To recognize NCI share of profit and OCI:

debit Consolidated Net Income ........................................ $X
debit Consolidated OCI (if applicable) ................................ $Y
credit Non-controlling Interest ............................................ $X + $Y

To record dividends declared to NCI:

debit Non-controlling Interest
credit Cash or Payables

These entries preserve the accuracy of equity allocations and prevent distortions in retained earnings.

6. Statement of changes in equity — NCI section

A separate column must be presented to show movements in NCI during the period:

Movement	Effect on NCI Equity
Share of net income	Increase
Share of OCI	Increase or decrease
Dividends paid to NCI shareholders	Decrease
Changes in ownership without control loss	Increase or decrease

7. Disclosure requirements

Entities must disclose:

The profit or loss attributable to NCI, clearly distinguished from parent’s share.
The components of OCI attributable to NCI.
Reconciliation of opening and closing NCI balances.
Any material restrictions on transferring funds from subsidiaries with NCI.

Example note:

“Net income attributable to non-controlling interests was $2.1 million in 2024. The increase in NCI’s equity includes their share of profit and OCI totaling $2.5 million, less dividends of $400,000.”

8. IFRS vs. US GAAP treatment

Aspect	US GAAP	IFRS
Attribution required?	Yes	Yes
Presentation in equity?	Separate component	Separate component
Attribution before eliminations?	Yes	Yes
Statement of changes in equity	Column for NCI	Column for NCI

Key take-aways

Attribution of net income and OCI ensures that financial results accurately reflect the ownership structure.
The NCI’s share must be presented clearly in the income statement, statement of comprehensive income, and equity reconciliation.
All attribution calculations must follow intra-entity eliminations to avoid overstating either party’s interest.
Proper attribution reinforces transparency and compliance with IFRS and US GAAP reporting requirements.