Rapp Corporation purchases 75 percent of the stock of Sikora Corporation for $363,000.Sikora has contributed capital of $200,000 and retained earnings of $284,000.The consolidated financial statements will contain

Question

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When one company acquires less than 100 percent of another company, there will be a non-controlling interest (minority interest) in the acquired company's equity. In this case, Rapp Corporation has acquired 75 percent of Sikora Corporation, which means there is a 25 percent non-controlling interest. Therefore, the consolidated financial statements will contain a minority interest but not negative goodwill since the acquisition cost was greater than the fair value of net assets acquired.

Rapp Corporation Purchases 75 Percent of the Stock of Sikora