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Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. On January 1, 2016, Thomson acquired a building with a 10-year life for $460,000. Thomson depreciated the building on the straight-line basis assuming no salvage value. On January 1, 2018, Thomson sold this building to Stayer for $430,400. At that time, the building had a remaining life of eight years but still no expected salvage value.What is the consolidated total of noncontrolling interest appearing on the balance sheet?

a. $85,500
b. $83,100
c. $87,000
d. $70,500

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Final answer:

Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated. The consolidated total of noncontrolling interest appearing on the balance sheet is $124,200.

Step-by-step explanation:

The noncontrolling interest is the ownership interest in a subsidiary that is not attributable to the parent company. In this case, Thomson Corporation owns 70 percent of the outstanding stock of Stayer, Incorporated, leaving 30 percent as noncontrolling interest. The consolidated total of noncontrolling interest appearing on the balance sheet can be calculated by multiplying the fair value of the subsidiary's net assets by the noncontrolling interest percentage.

In this scenario, Thomson sold a building to Stayer. Since the building had a remaining life of eight years with no expected salvage value, the carrying value of the building on the consolidated balance sheet would be the remaining book value of the building. To calculate the noncontrolling interest, we can multiply the carrying value by the noncontrolling interest percentage of 30 percent:

Carrying value of the building = Book value of the building = $460,000 - (2 years of depreciation expense) = $460,000 - (2/10 * $460,000) = $414,000

Noncontrolling interest = Carrying value of the building * Noncontrolling interest percentage = $414,000 * 30% = $124,200

Therefore, the consolidated total of noncontrolling interest appearing on the balance sheet is $124,200.

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