What would be the balance in the non-controlling interest account on the date of acquisition?

Question

Quizplus · Accepted Answer

The non-controlling interest represents the portion of the subsidiary's equity that is not owned by the parent company. On the date of acquisition, the non-controlling interest balance would be equal to the proportionate share of the subsidiary's equity owned by the non-controlling interest shareholders. In this case, the non-controlling interest owns 40% of the subsidiary's equity which is $666,667 ($1,666,667 x 40%). Therefore, the balance in the non-controlling interest account on the date of acquisition would be $266,667 ($666,667 - $400,000).

What Would Be the Balance in the Non-Controlling Interest Account