Melody Inc.purchased 75% of Tune Time Co.'s voting shares for $375,000.The book value of the net assets acquired was $150,000 and they were undervalued by $90,000.The amount of non-controlling interest that would be shown on the consolidated balance sheet at the date of acquisition would be:

Question

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The fair value of Tune Time Co.'s net assets at acquisition is the book value plus the undervaluation, which is $150,000 + $90,000 = $240,000. Melody Inc. purchased 75%, so the non-controlling interest (NCI) owns 25%. The NCI share of the fair value of net assets is 25% of $240,000, which is $60,000.