McGuire Company acquired 90 percent of Hogan Company on January 1, 2019, for $23
ID: 2540605 • 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 acquisition-date 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: Fair Value $ 8,000 18,000 12,000 Book Value Buildings (10-year life) Equipment (4-year life) Land $10,000 14,000 5,000 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:Explanation / Answer
Non-controlling interest :- is the part of the net results of operations and of net assets of a subsidiary attributable to interest which are not owned, directly or indirectly through susidiary(ies), by the parent . in simple words some assets is belong to other than parent company.
As per IFRS :- An entity shall attribute the profit or loss and each component of other comprehensive income to the owners of the parent and to the non-controlling interests. The entity shall also attribute total comprehensive income to the owners of the parent and to the noncontrolling interests even if this results in the non-controlling interests having a deficit balance.
Calculation of Non controling interst :- share capital of subsidiary related to outsider(other than parent here 10%) + Part of Profit/Loss and Reserve.
Calculation Of noncontroling interest in Hogan company ( 10%)
Total Value of comapny = ( 234000 / 90%) = 260000
Calculation Of noncontroling interest in Hogan company ( 10%)
Total Value of comapny = ( 234000 / 90%) = 260000