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15 May, 16:10

On January 2, 20X2, Piranha Company acquired 70 percent of Salmon Corporation's common stock for $420,000 cash. At the acquisition date, the book values and fair values of Salmon' assets and liabilities were equal, and the fair value of the noncontrolling interest was equal to 30 percent of the total book value of Salmon. The stockholders' equity accounts of the two companies at the acquisition date are as follows:

Piranh Salmon

Common Stock ($10 par value) $600,000 $350,000

Additional Paid-In Capital 450,000 50,000

Retained Earnings 250,000 200,000

Total Stockholders' Equity $1,300,000 $600,000

Noncontrolling interest was assigned income of $15,000 in Piranh consolidated income statement for 20X2.

Based on the preceding information, what amount will be assigned to noncontrolling interest on January 2, 20X2, in the consolidated balance sheet?

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  1. 15 May, 16:33
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    Non Controlling interest (NCI) = 180000

    Explanation:

    Fair value of assets = Book Values

    Total Equity of Salmon on 2 January 2002 = 600000

    Share of Net assets NCI 30% = 600000*30% = 180000

    There is no change at acquisition so 30% will be applied on book value which is equal to Fair Value.

    15,000 income relates to the post acquisition share of profit of NCI.
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