According to Financial Accounting Standards Board (FASB), there is a specified way in which the non-controlling interest (minority interest) should be reported in the consolidated financial statements. These details are provided in accounting rules SFAS 141(R) and SFAS 160.

According to the new rules, all assets and liabilities of the acquired company must be recognized on the equity section of the balance sheet at full fair value.

The calculation of non-controlling interest is as follows:

1. Calculate fair value of the non-controlling interest (fair value of the equity). This is the value at which you can reasonable expect to sell your holding in the market. As an example, if company M has 80% stake in company X, then the remaining 20% is the non-controlling interest in company X. let’s say the fair value of non-controlling interest is $10 million.
2. Make any fair-value adjustments, such as for goodwill. For example, if the fair value of non-controlling equity is 10 million, you may want to add $1 million for goodwill and any other fair value adjustments, making the total as $11 million.
3. Add prorate income attributed to the non-controlling equity interest. At the time of sale, if the company had an income of $5 million, then the prorate share of income for non-controlling interest will be 20% of 5million = $1 million. Add this income to the fair value, i.e., $11 million + $1 million = $12 million.
4. Subtract prorate share of dividends. If prorate share of dividends is $1 million, this will be subtracted from the total fair value, i.e., $10 million - $1 million = $11 million.
5. This final fair value will be recorded in the equity section of the consolidated balance sheet of the parent company.

The above calculation can be summarized as follows:

NCI equity = Beginning NCI equity Fair Value + NCI's interest in subsidiary income - NCI's share of dividends