Compute the noncontrolling interest in Smith at date of acquisition.
A) $486,000.
B) $480,000.
C) $300,000.
D) $150,000.
E) $120,000.

Question

Quizplus · Accepted Answer

The noncontrolling interest is calculated as the percentage of the subsidiary not owned by the parent company multiplied by the fair value of the subsidiary at the acquisition date. If the fair value of Smith is $1,200,000 and the parent owns 60%, the noncontrolling interest is 40% of $1,200,000, which is $480,000.

Compute the Noncontrolling Interest in Smith at Date of Acquisition