Advanced Accounting Test #2 203 Update A+
1. ownership percent and consolidation - complete ownership is not a prerequisite for
consolidation. A single economic entity is formed whenever one company is able to
control the decision-making process of another.
2. non-controlling interest fair value - Ninety percent (90%) of the common stock of a
subsidiary company was purchased for $3,600,000,000. Determine the acquisition date
fair value of the entire subsidiary company (FVSC) based on the purchase price.
$3,600,000 90%
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FVSC 100%
90% * FVSC = 100% * $3,600,000
0.9FVSC = $3,600,000
FVSC = $3,600,000 / 0.9
FVSC = $4,000,000
3. amount of goodwill recognized at the date of acquisition. - The total fair value is
$3,000,000, and the fair value of net assets is $2,000,000. Determine the amount of
goodwill.
Total fair value $3,000,000
Less the fair value of net assets <2,000,000>
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Goodwill $1,000,000
4. goodwill attributed to controlling interest - The purchase price for 80% of a controlling
interest is $5,000,000. The fair value of the controlling interest's share of fair value of
identifiable net assets ($3,000,000 * 80%) is $2,400,000. Determine the goodwill
attributed to the controlling interest.
Purchase price for 80% of a controlling interest $5,000,000
Less fair value of the controlling interest's share of
fair value of identifiable net assets <2,400,000>
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Goodwill attributed to the controlling interest. $2,600,000
5. non-controlling interest's share of adjusted net income - The subsidiary's revenues
are $3,000,000, and its expenses are $2,000,000. The excess acquisition-date fairvalue amortization is $100,000. And the non-controlling interest percentage is twenty
percent (0.20). Determine the non-controlling interest's share of adjusted subsidiary net
income.