On August 31, 2015, Hoselaw Inc. (Hoselaw)

purchased 60 percent of the common shares of Upsalquitch Ltd. (Upsalquitch) for

$8,000,000. At the time of the purchase, Upsalquitch’s management made the following estimates of the fair values of it’s assets and liabilities:

Required:

a. Calculate the amount of non-controlling interest that Hoselaw would report on its August 31, 2015 consolidated balance sheet as a result of its purchase of Upsalquitch.

b. What amount would be included in each asset and liability account on the August 31, 2015 consolidated balance sheet as a result of the purchase of Upsalquitch?

c. What does non-controlling interest on the balance sheet represent? Explain why it appears. How should users of financial statements interpret non-controlling interest?

Transcribed Image Text:

Current assets Tangible capital assets Patents Current liabilities Long-term debt Carrying amount of Upsalquitch's assets and liabilities on August 31, 2015 $1,000,000 Fair Value of Upsalquitch's assets and liabilities on August 31, 2015 $1,250,000 3,600,000 3,000,000 100,000 1,000,000 875,000 900,000 2,125,000 2,000,000