Respond to the following:

A parent owns 60% of a subsidiary. The carrying amount of the non-controlling interests (NCI) of 40% is $160 million under the fair-value-of-the-identifiable-net-assets (proportionate) method and $200 million under the fair-value method. There are no amounts accumulated in other comprehensive income for this subsidiary. The parent acquires an additional 10% from NCI for $110 million in cash.

a. Assume the parent used the fair-value method to initially measure NCI upon obtaining control of the subsidiary. List any concerns with this accounting. Prepare the required journal entries to record the acquisition of the additional 10% interest in the subsidiary under US GAAP and IFRS.

b. Assume the parent used the proportionate method (identifiable net assets without goodwill) to initially measure NCI upon obtaining control of the subsidiary. List any concerns with this accounting method. Prepare the required journal entries to record the acquisition of the additional 10% interest in the subsidiary under US GAAP and IFRS.