King Limited paid $220 000 for 70% of Prince Limited. At the date of acquisition Prince Limited had share capital of $200 000 and retained earnings of $100 000 and all of Prince Limited's assets and liabilities were recorded at fair value. The fair value of identifiable net assets acquired by King Limited amounted to:

Question

Quizplus · Accepted Answer

To determine the fair value of identifiable net assets acquired, we need to subtract the fair value of non-controlling interest from the fair value of the subsidiary's net assets.

Step 1: Find the fair value of 30% non-controlling interest:
    Non-controlling interest = 100% - 70% = 30%
    NCI = 30% x ($200,000 + $100,000) = $90,000

Step 2: Find the fair value of identifiable net assets acquired:
    Fair value of identifiable net assets = Total fair value of net assets - Fair value of NCI
    Total fair value of net assets = ($200,000 + $100,000) x 70% = $210,000
    Fair value of identifiable net assets = $210,000 - $90,000 = $120,000

Therefore, the answer is B) $210,000.

King Limited Paid $220 000 for 70% of Prince Limited