A company had common stock with a total par value of $18,000,000 and fair value of $62,000,000; and 7% preferred stock with a total par value of $6,000,000 and a fair value of $8,000,000.The book value of the company was $85,000,000.Assuming ninety percent (90%) of the company's total equity is acquired, what amount must be attributed to the noncontrolling interest?
A) $8,500,000.
B) $7,000,000.
C) $6,200,000.
D) $2,400,000.
E) $6,929,400.

Question

Quizplus · Accepted Answer

The noncontrolling interest is 10% of the total equity. The total equity is $85,000,000, so 10% of this is $8,500,000. However, since 90% is acquired, the noncontrolling interest is 10% of the fair value of the equity, which is $70,000,000 (90% of $85,000,000), so 10% of $70,000,000 is $7,000,000.

A Company Had Common Stock with a Total Par Value