On January 1,20X6,Power Company acquired 80 percent of Strong Company's outstanding stock for cash.The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Strong Company's net assets at the date of acquisition.Selected balance sheet data at December 31,20X6 are as follows:

-Based on the preceding information,what amount should be reported as noncontrolling interest in net assets in Power Company's December 31,20X6,consolidated balance sheet?
A)$35,200
B)$48,200
C)$76,800
D)$112,800

Question

On January 1,20X6,Power Company acquired 80 percent of Strong Company's outstanding stock for cash.The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Strong Company's net assets at the date of acquisition.Selected balance sheet data at December 31,20X6 are as follows:
 
-Based on the preceding information,what amount should be reported as noncontrolling interest in net assets in Power Company's December 31,20X6,consolidated balance sheet?
A)$35,200 
B)$48,200 
C)$76,800 
D)$112,800

Quizplus · Accepted Answer

Since Power Company acquired 80% of Strong Company's outstanding stock, it means that the noncontrolling interest owns 20% of the net assets of Strong Company. The fair value of the noncontrolling interest was equal to a proportionate share of the book value of Strong Company's net assets at the date of acquisition. Therefore, the noncontrolling interest's share of Strong Company's net assets as of December 31, 20X6, would be 20% of Strong Company's total net assets of $176,000, which is $35,200. Therefore, the correct amount to report as noncontrolling interest in net assets in Power Company's December 31, 20X6, consolidated balance sheet is $35,200.

On January 1,20X6,Power Company Acquired 80 Percent of Strong Company's