In consolidation accounting, non-controlling interest represents:

• A. The portion of the subsidiary's equity not owned by the parent.
• B. The portion of the parent's equity attributed to minority shareholders.
• C. The portion of the group's liabilities not guaranteed.
• D. The portion of the subsidiary's assets not consolidated.

Answer: (D)

Non-controlling interest refers to the portion of a subsidiary’s equity that is not owned by the parent. When a parent consolidates a subsidiary, the group combines the subsidiary’s assets and liabilities with its own, and then the subsidiary’s net assets are allocated between the parent and the other shareholders. The non-controlling interest is shown within the consolidated equity as the minority shareholders’ claim on the subsidiary’s net assets, and it also represents their share of the subsidiary’s net income for the period.

For example, if a subsidiary has net assets of 400 and the parent owns 75%, the non-controlling interest is 25% of 400, which is 100. The consolidated balance sheet would reflect the parent’s share of net assets and show the non-controlling interest as a separate component of equity. This concept is about ownership of net assets, not about guaranteeing liabilities or about assets that aren’t consolidated.