Question

Which is the best measure of fair value per share for the noncontrolling interest in a subsidiary at the date of acquisition, if the subsidiary's stock is actively traded?

1) Market price of the subsidiary's stock on the date of acquisition
2) Book value of the subsidiary's stock on the date of acquisition
3) Intrinsic value of the subsidiary's stock on the date of acquisition
4) Net present value of the subsidiary's future cash flows

Answer 1

The market price of the subsidiary's stock on the date of acquisition is the best measure of fair value per share for the noncontrolling interest in a subsidiary. Therefore, the correct option is 1.

Step-by-step explanation:

The best measure of fair value per share for the noncontrolling interest in a subsidiary at the date of acquisition, if the subsidiary's stock is actively traded, is the market price of the subsidiary's stock on the date of acquisition. This is because the market price reflects the current supply and demand dynamics of the stock, and it represents the price at which investors are willing to buy and sell the stock in the open market.