In the current year, MC Company is formed with $630,000 in capital from the sale of 21,000 shares of stock at $30 a share. MC Company, which has no other operations, immediately acquires 60% of the voting stock of B Company for $630,000. B Company is a business whose fair value of identifiable net assets on the date of MC 's acquisition is $700,000. This amount includes a $30,000 premium that was paid to gain control of B.The fair value of the 40% non-controlling interest (NCI) is $400,000.

MC subsequently sold another 3,000 shares of its stock at $50 per share. MC used the $150,000 proceeds to acquire 10% of the outstanding voting stock of B held by the NCI. Assume, for purposes of this example, that the carrying amount of the NCI under the proportionate method and the fair-value method is unchanged from the value at the original investment date by MC.

MC subsequently sells 60% of the voting interest in B for $900,000. The fair value of MC 's retained interest of 10% in the voting stock in B is $120,000. The carrying amount of the identifiable net assets of B, exclusive of goodwill, is $770,000 (assume the increase in value was already recorded by MC by recording a debit to investment and a credit to income, both for $70,000). Assume for purposes of this example that the carrying amount of the NCI under the proportionate method and the fair value method are unchanged from the value at the date of the additional 10% interest purchased by Husker.

Required

Show the calculations and journal entries to record MC 's initial investment in B under the proportionate method and the fair-value method of accounting for NCI.

Show the calculations and journal entries to record MC 's additional investment in B under the proportionate method and the fair-value method of accounting for NCI.

Show the calculations and journal entries to record MC's sale of its 60% investment in B under the proportionate method and the fair-value method of accounting for NCI.

Additional requirements:

oDepending on the method utilized, how would the financial statements be impacted?

oDo you believe the differences between US GAAP and IFRS are significant? Provide support for your answer.

oWhich method provides a better reflection of the underlying transactions? Provide support for your answer.