Question

"Which statement is TRUE concerning the valuation of noncontrolling interests at the date of acquisition per U.S. GAAP?

a) Noncontrolling interests are always valued at their fair value at the date of acquisition.
b) Noncontrolling interests are valued at their book value at the date of acquisition.
c) The valuation of noncontrolling interests depends on the percentage of ownership acquired.
d) The choice between fair value and book value for noncontrolling interests is at the discretion of the acquirer."

Answer 1

Under U.S. GAAP, the valuation of noncontrolling interests at the date of acquisition depends on the discretion of the acquirer, who can choose between fair value and book value. Option d.

Step-by-step explanation:

The correct statement concerning the valuation of noncontrolling interests at the date of acquisition per U.S. GAAP is option d) The choice between fair value and book value for noncontrolling interests is at the discretion of the acquirer. Under U.S. GAAP, the acquirer has the flexibility to choose either fair value or book value to value noncontrolling interests. This choice should be consistently applied to all non controlling interests in similar circumstances. Fair value is often considered the most common method due to its current market value representation.