Question

Reuben Corporation holds assets with a fair value of $150,000 and a book value of $125,000 and liabilities with a book value and fair value of $50,000. What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Holmes Company pays $90,000 to acquire 75 percent ownership in Reuben and goodwill of $20,000 is reported

Answer 1

$30,000

Step-by-step explanation:

Fair value of equity = Fair value of Assets - Fair value of liabilities

Fair value of equity = $150,000 - $50,000

Fair value of equity = $100,000

Holmes Company pays $75,000 to acquire 75% of Equity

Holmes Company pays $15,000 for 75% of goodwill

Non controlling interest = 25% of Equity + 25% of Goodwill

Non controlling interest = 0.25*($100,000) + 0.25*($20000)

Non controlling interest = $25,000 + $5,000

Non controlling interest = $30,000