Use the following information to answer bellow Questions
Python acquires 80% of the voting stock of Slither on January 1, 2020 for $4,000. The fair value of the noncontrolling interest is $950. Slither's balance sheet at the date of acquisition is as follows:
$\begin{array}{|l|r|r|}
\hline & \begin{array}{c}
\text { Book Value } \
\text { Dr (Cr) }
\end{array} & \begin{array}{c}
\text { Fair Value } \
\text { Dr (Cr) }
\end{array} \
\hline \text { Tangible assets } & \$ 5,000 & \$ 6,500 \
\hline \text { Identifiable int angibles } & - & 2,000 \
\hline \text { Liabilities } & \{3,000\} & \{3,000\} \
\hline \text { Capital stock } & \{600\} & - \
\hline \text { Retained earnings } & \{1,400\} & - \
\hline
\end{array}$
-On the consolidation working paper at January 1, 2020, what is the credit to noncontrolling interest in Slither for eliminating entry (E)?

Question

Use the following information to answer bellow Questions
Python acquires 80% of the voting stock of Slither on January 1, 2020 for $4,000. The fair value of the noncontrolling interest is $950. Slither's balance sheet at the date of acquisition is as follows:
 $\begin{array}{|l|r|r|}
\hline & \begin{array}{c}
\text { Book Value } \
\text { Dr (Cr) }
\end{array} & \begin{array}{c}
\text { Fair Value } \
\text { Dr (Cr) }
\end{array} \
\hline \text { Tangible assets } & \$ 5,000 & \$ 6,500 \
\hline \text { Identifiable int angibles } & - & 2,000 \
\hline \text { Liabilities } & \{3,000\} & \{3,000\} \
\hline \text { Capital stock } & \{600\} & - \
\hline \text { Retained earnings } & \{1,400\} & - \
\hline
\end{array}$
-On the consolidation working paper at January 1, 2020, what is the credit to noncontrolling interest in Slither for eliminating entry (E)?

Quizplus · Accepted Answer

The noncontrolling interest in Slither is calculated based on the fair value of Slither's net assets and the fair value of the noncontrolling interest itself. The fair value of Slither's net assets is calculated as the sum of the fair values of its tangible assets and identifiable intangibles minus its liabilities, which is $6,500 + $2,000 - $3,000 = $5,500. The total fair value of Slither is the sum of the fair value of the controlling interest ($4,000) and the fair value of the noncontrolling interest ($950), totaling $4,950. The noncontrolling interest percentage is 20% (100% - 80% controlling interest), and 20% of the fair value of Slither's net assets ($5,500) is $1,100. However, since the fair value of the noncontrolling interest is given as $950, the credit to noncontrolling interest in the consolidation working paper should reflect this amount, indicating an adjustment is needed. The difference between the calculated noncontrolling interest ($1,100) and the given fair value of the noncontrolling interest ($950) is $150. This discrepancy suggests an error in the calculation or interpretation, as the correct approach should directly use the given fair value of the noncontrolling interest ($950) for the consolidation entry, not requiring further adjustment based on the calculation provided. The correct entry should directly reflect the fair value of the noncontrolling interest without additional adjustments for discrepancies.

Use the Following Information to Answer Bellow Questions Python Acquires

Use the Following Information to Answer Bellow Questions
Python Acquires