Question

Stick Company reports net assets with a book value and fair value of $204,000. Paste Corporation acquires 75 percent ownership for $153,000. Paste reports net assets with a book value of $529,000 and a fair value of $635,000 at that time, excluding its investment in Stick. Required: For each of the following, compute the amounts that would be reported immediately after the combination under current accounting practice:

a. Consolidated net identifiable assets.
b. Noncontrolling interest.

Answer 1

The consolidated net identifiable assets would be $431,000 and the noncontrolling interest would be 25%.

Step-by-step explanation:

To calculate the consolidated net identifiable assets, we need to subtract the fair value of Stick's net assets from the fair value of Paste's net assets.

In this case, the consolidated net identifiable assets would be $635,000 - $204,000 = $431,000.

The noncontrolling interest is the ownership percentage that Stick Company does not own in Paste Corporation.

In this case, Stick owns 75% of Paste, so the noncontrolling interest would be 100% - 75% = 25%.