Question

Stick Company reports net assets with a book value and fair value of $204,000. Paste Corporation acquires 75 percent ownership for $153,000. Paste reports net assets with a book value of $529,000 and a fair value of $635,000 at that time, excluding its investment in Stick. Required: For each of the following, compute the amounts that would be reported immediately after the combination under current accounting practice:
a. Consolidated net identifiable assets.
b. Noncontrolling interest.

Answer 1

Answer:

a. i) Consolidated Net Identifiable Assets Under Book value method=$529,000+$153000=$682,000

ii) Consolidated Net Identifiable Assets Under fair value method=$635,000+$153000=$788,000

b. Noncontrolling interest=$51000(204000-153000)

Explanation:

Consolidated Net identifiable assets are recorded in balance sheet in Non-Current Assets whereas Noncontrolling interest ins recorded on liability side.