On August 1, Year 5, A Company acquired 70 Percent of the common shares of C Company for $700,000 On that date, the fair value of Cs identifiable net assets was $600,000 and the book value of its shareholders equity was $500,000 Assume that fair value enterprise method will be used for valuation of subsidiary What amount of non controlling interest should be reported on the balance sheet on the date of acquisition $0 $150,000 $180,000 $300,000 Assume that Identifiable net asset method will be used for valuation of subsidiary What amount of no controlling interest should be reported on the consolidated balance sheet on the date of acquisition $0 $115,000 $180,000 $300,000 On January 1, Year 5 ,PEB acquired 100 Percent of the common shares of SEB for $ 600,000 On that date , the fair value of SEBs identifiable net assets was $700,000 Which of the following is the appropriate treatment of $100,000 acquisition differential It should be recognized as a gain on purchase It should be allocated to identifiable non monetary assets It should be allocated to non current assets with any remaining balance reported as an extraordinary item A deferred credit should be set up and amortized over a maximum of five years

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 31, 2024

On August 1, Year 5, A Company acquired 70 Percent of the common shares of C Company for $700,000. On that date, the fair value

On August 1, Year 5, A Company acquired 70 Percent of the common shares of C Company for $700,000. On that date, the fair value of Cs identifiable net assets was $600,000 and the book value of its shareholders equity was $500,000

Assume that fair value enterprise method will be used for valuation of subsidiary. What amount of non-controlling interest should be reported on the balance sheet on the date of acquisition?

$0
$150,000
$180,000
$300,000

Assume that Identifiable net asset method will be used for valuation of subsidiary. What amount of no controlling interest should be reported on the consolidated balance sheet on the date of acquisition?

$0
$115,000
$180,000
$300,000

On January 1, Year 5 ,PEB acquired 100 Percent of the common shares of SEB for $ 600,000.On that date , the fair value of SEBs identifiable net assets was $700,000 . Which of the following is the appropriate treatment of $100,000 acquisition differential?

It should be recognized as a gain on purchase.
It should be allocated to identifiable non-monetary assets.
It should be allocated to non-current assets with any remaining balance reported as an extraordinary item.
A deferred credit should be set up and amortized over a maximum of five years