McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $23
ID: 2338479 • Letter: M
Question
McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $234,000 cash. This amount is reflective of Hogan's total fair value. Hogan's stockholders' equity consisted of common stock of $160,000 and retained earnings of $80,000. An analysis of Hogan's net assets revealed the following:
Book value Fair value
Buildings (10 year life) 10,000 8,000
Equipments ( 4 year life) 14,000 18,000
Land 5,000 12,000
Any excess consideration transferred over fair value is attributable to an unamortized patent with a useful life of 5 years.
The acquisition value attributable to the noncontrolling interest at January 1, 2019 is:
A) $24,900
B) $26,000
C) $20,000
D) $23,400
E) $24,000
Explanation / Answer
Total worth of Hogan as per acquisition = 234000/0.9 = $260,000
Noncontrolling interest = 260000*.1 = $26,000 Answer
The acquisition value attributable to the noncontrolling interest at January 1, 2019 is:
B) $26,000