Postage Corporation acquired 75 percent of Stamp Corporation's common stock on December 31,20X8,for $300,000.The fair value of the noncontrolling interest at that date was determined to be $100,000.Stamp's balance sheet immediately before the combination reflected the following balances:
A careful review of the fair value of Stamp's assets and liabilities indicated that inventory,land,and buildings and equipment (net)had fair values of $65,000,$100,000,and,$300,000 respectively.Goodwill is assigned proportionately to Postage and the noncontrolling shareholders.
-Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition?
A)$0
B)$70,000
C)$83,750
D)$100,000

Question

Postage Corporation acquired 75 percent of Stamp Corporation's common stock on December 31,20X8,for $300,000.The fair value of the noncontrolling interest at that date was determined to be $100,000.Stamp's balance sheet immediately before the combination reflected the following balances:
  A careful review of the fair value of Stamp's assets and liabilities indicated that inventory,land,and buildings and equipment (net)had fair values of $65,000,$100,000,and,$300,000 respectively.Goodwill is assigned proportionately to Postage and the noncontrolling shareholders.
-Based on the preceding information,what amount will be reported as noncontrolling interest in the consolidated balance sheet immediately following the acquisition?
A)$0 
B)$70,000 
C)$83,750 
D)$100,000

Quizplus · Accepted Answer

The noncontrolling interest is typically calculated as the fair value of the noncontrolling interest at the acquisition date, which is often the proportionate share of the subsidiary's net assets. In this case, it is $100,000.

Postage Corporation Acquired 75 Percent of Stamp Corporation's Common Stock