Question
Acquiree Co. is a 90%-owned subsidiary of Acquirer Co. The carrying amounts of the noncontrolling interest and the subsidiary are 1000,000 and 10,000,000, respectivley. the
Acquiree Co. is a 90%-owned subsidiary of Acquirer Co. The carrying amounts of the noncontrolling interest and the subsidiary are 1000,000 and 10,000,000, respectivley. the subsidiary's fair value is 15,000,000. Acquirer transferred part of its interst to Third Co. on December 31 for 12,000,000 in cash but retained a noncontrolling interest equal to 20% of Acquiree's voting interests. The fair value of the retained interest, which gives Acquirer significant influence, is 3000,000. The fair values and carrying amounts are as of December 31. Acquirer must account for this transaction:
By recognizing a gain of 5,000,000
By recognizing a gain of 6,000,000
By recognizing a gain of 1,000,000
By recognizing a loss of 3,000,000
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started