In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?
A) Fair value based on stock trades of the acquired company.
B) Subsidiary cash flows discounted to present value.
C) Book value of subsidiary net assets.
D) Projections of residual income.
E) Consideration transferred by the parent company that implies a total subsidiary value.

Question

Quizplus · Accepted Answer

The book value of subsidiary net assets does not reflect the fair value or market-based valuation methods typically used to measure noncontrolling interest.

In Measuring the Noncontrolling Interest Immediately Following the Date of Acquisition