On January 1, 2016, Payne Corp.purchased 70% of Shayne Corp.'s $10 par common stock for $900,000.On this date, the carrying amount of Shayne's net assets was $1,000,000.The fair values of Shayne's identifiable assets and liabilities were the same as their carrying amounts except for plant assets (net), which were $200,000 in excess of the carrying amount.For the year ended December 31, 2016, Shayne had net income of $150,000 and paid cash dividends totaling $90,000.Excess attributable to plant assets is amortized over 10 years.
In the December 31, 2016, consolidated balance sheet, non-controlling interest should be reported at ____.
A)$282,714
B)$300,500
C)$397,714
D)$345,500

Question

On January 1, 2016, Payne Corp.purchased 70% of Shayne Corp.'s $10 par common stock for $900,000.On this date, the carrying amount of Shayne's net assets was $1,000,000.The fair values of Shayne's identifiable assets and liabilities were the same as their carrying amounts except for plant assets (net), which were $200,000 in excess of the carrying amount.For the year ended December 31, 2016, Shayne had net income of $150,000 and paid cash dividends totaling $90,000.Excess attributable to plant assets is amortized over 10 years. ​
In the December 31, 2016, consolidated balance sheet, non-controlling interest should be reported at ____.
A)​$282,714
B)​$300,500
C)​$397,714
D)​$345,500

Quizplus · Accepted Answer

The non-controlling interest must be calculated first:

Non-controlling interest = (Fair value of Shayne's net assets - Purchase price of Payne Corp) x Non-controlling interest percentage 
Non-controlling interest = [$1,000,000 + ($200,000/70%)] - $900,000) x 30% 
Non-controlling interest = $397,714

Therefore, the non-controlling interest should be reported at $397,714 in the consolidated balance sheet.