When using the indirect method to calculate cash flow from operations, add back the subtraction for minority interest in earnings of consolidated, but less than 100%-owned subsidiaries to derive cash flow from operations.

Question

Quizplus · Accepted Answer

Under the indirect method of calculating cash flow from operations, the subtraction for minority interest in earnings of consolidated, but less than 100%-owned subsidiaries is added back to the net income to derive cash flow from operations. This is because minority interest represents a portion of the subsidiary's earnings that the parent company does not own, and therefore should not be included in the calculation of the parent company's cash flow from operations.

When Using the Indirect Method to Calculate Cash Flow from Operations