In order to consolidate a 70% interest in a subsidiary,the Fitzpatrick group prepared the following pre-acquisition entry:
DR Retained earnings $2 000
DR Share capital $15 000
DR General reserve $3 000
DR Goodwill $1 000
CR Investment in subsidiary $21 000
The interest in equity attributable to the direct non-controlling interest (to the nearest dollar)is:

Question

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The total equity of the subsidiary is $21,000 (sum of retained earnings, share capital, and general reserve). The Fitzpatrick group has a 70% interest, so the non-controlling interest is 30%. Therefore, the non-controlling interest is 30% of $21,000, which is $6,300. However, the question asks for the interest attributable to the direct non-controlling interest, which is calculated as 30% of the investment in the subsidiary ($21,000), resulting in $8,571.

In Order to Consolidate a 70% Interest in a Subsidiary,the