Asked by Becca Moore on May 21, 2024
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Caldwell Inc. acquired 65% of Club Corp. for $2,600,000. There was no active market for the shares of Club Corp. Club owned a building and equipment with ten-year useful lives. The combined book value of these assets was $830,000, and the fair value was $950,000. For Club's other assets and liabilities, book value was equal to fair value. The total acquisition-date fair value of Club's net assets was $3,500,000.Determine the amount of the noncontrolling interest as of the date of the acquisition.
Noncontrolling Interest
Refers to the portion of equity in a subsidiary not attributable directly or indirectly to the parent company.
Acquisition-Date Fair Value
The fair value of an asset or liability at the date it is acquired in a business combination.
Combined Book Value
The total value of a company's assets as recorded in its financial books, excluding intangible items and liabilities.
- Understand the determination of noncontrolling interest and its value at the date of acquisition.
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Learning Objectives
- Understand the determination of noncontrolling interest and its value at the date of acquisition.