1. A company issues new stock with a fair value of $120,000 to acquire 85% of the stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $19,000, and the book value of the acquired company is $15,000. The subsidiary's net assets are reported at amounts approximating fair value at the date of acquisition, except that its plant assets are overvalued by $25,000, its reported license agreements are undervalued by $30,000, and it has previously unreported identifiable intangible assets with a fair value of $50,000. At what amount is the noncontrolling interest valued at the date of acquisition, following the alternative method allowed by IFRS? A. $10,500 B. $ 2,250 C. $19,000 D. $18,000

Question

Business

Donovan Bell

17 June, 13:16

1. A company issues new stock with a fair value of $120,000 to acquire 85% of the stock of another company. The fair value of the noncontrolling interest at the date of acquisition is $19,000, and the book value of the acquired company is $15,000. The subsidiary's net assets are reported at amounts approximating fair value at the date of acquisition, except that its plant assets are overvalued by $25,000, its reported license agreements are undervalued by $30,000, and it has previously unreported identifiable intangible assets with a fair value of $50,000. At what amount is the noncontrolling interest valued at the date of acquisition, following the alternative method allowed by IFRS? A. $10,500 B. $ 2,250 C. $19,000 D. $18,000

+5

Answers (1)

Know the Answer?

Quentin Dougherty · Answer 1

A. $10,500

Explanation:

FV of IDNA:

Book value $ 15,000

Revalued plant assets ($25,000)

license agreements $30,000

Intangible assets $50,000

$ 70,000

Non-controlling interest valued at the date of acquisition, following the alternative method allowed by IFRS = 15% * 70,000 = $10,500.