Question

Thyme, Inc. owns 16,000 of Sage Co.'s 20,000 outstanding common shares. The carrying value of Sage's equity is $500,000. Sage subsequently issues an additional 5,000 previously unissued shares for $200,000 to an outside party that is unrelated to either Thyme or Sage. What is the total noncontrolling interest after the additional shares are issued?

Answer 1

The total non controlling interest after the additional shares are issued is equal to $252,000.

Step-by-step explanation:

Before the issue Sage co's had 20,000 shares with total equity value of $500,000. After the issue of 5000 shares worth $200,000, the total number of shares and equity would be -

Total number of shares = 25,000 ( 20,0000 + 5000 )

Total equity value = $700,000

Now Thyme inc owns 16,000 number of shares , which means that minority holds 9000 number of shares . Now the price per share would be =

TOTAL EQUITY / NUMBER OF SHARES

$700,000 / 25,000

= $28

NON CONTROLLING INTEREST = Minority shares x Price per shares

= 9000 x $28

= $252,000