Which statement about non-controlling interest (NCI) is accurate in consolidated statements?

• A. A liability to be paid to other owners.
• B. Part of the parent’s equity.
• C. A deduction from total assets.
• D. A separate line item within equity representing the non-controlling portion.

Answer: (D)

Non-controlling interest represents the portion of a subsidiary’s equity that is owned by shareholders other than the parent. In consolidated statements, it is shown as a separate line item within equity on the consolidated balance sheet, not as a liability and not as part of the parent’s equity. This placement reflects that control of the subsidiary is consolidated, while recognizing the claims of the other owners on the subsidiary’s net assets. It is also not a deduction from total assets. (If discussing the income statement, the NCI’s share of the subsidiary’s net income is shown separately, reducing consolidated net income.) Therefore, the best description is a separate line item within equity representing the non-controlling portion.