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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

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  1. 17 June, 13:26
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    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.
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