Under which set of circumstances would it not be appropriate to assume the value the noncontrolling shares is the same as the controlling shares?
A) The acquisition is for less than 100% of the subsidiary.
B) The fair value of the noncontrolling shares can be inferred from the value implied by the acquisition price.
C) Active market prices for shares not obtained by the acquirer imply a different value.
D) The amount of the "control premium" cannot be determined .

Question

Quizplus · Accepted Answer

Active market prices for shares not obtained by the acquirer implying a different value would indicate that the value of the noncontrolling shares is not the same as the controlling shares. This is because the market's valuation of the shares not acquired can differ from the valuation implied by the acquisition price, which often includes a control premium.

Under Which Set of Circumstances Would It Not Be Appropriate