Scissor Corporation holds assets with a fair value of $150,000 and a book value of $125,000 and liabilities with a book value and fair value of $50,000.What balance will be assigned to the noncontrolling interest in the consolidated balance sheet if Paper Company pays $90,000 to acquire 75 percent ownership in Scissor and goodwill of $20,000 is reported?
A)$50,000
B)$30,000
C)$40,000
D)$20,000

Question

Quizplus · Accepted Answer

The noncontrolling interest is assigned the fair value of the net assets multiplied by the noncontrolling interest percentage. In this case, the noncontrolling interest is 25%, so the noncontrolling interest is assigned 25% of the $100,000 difference between the fair value and book value of the net assets, which is $25,000.

Scissor Corporation Holds Assets with a Fair Value of $150,000