Asked by Zachary Zamborelli on Jul 08, 2024
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IFRS permits several methods to be used to determine the fair value of the non-controlling interest in a subsidiary at the acquisition date. Which of the following is NOT an appropriate method to determine the fair value of the non-controlling interest (NCI) ?
A) The NCI may be valued at the market value of the subsidiary's shares.
B) The NCI may be valued by determining the fair value of the business by means of an independent business valuation and then deducting the fair value of the controlling interest.
C) The NCI may be valued proportionately to the price paid by the parent for its controlling interest.
D) The NCI can't be valued objectively, so a nominal value of one dollar is assigned to the NCI.
Non-Controlling Interest
A portion of equity ownership in a subsidiary not owned by the parent company, indicating minority shareholders' interest in the subsidiary's net assets.
Fair Value
The estimated market price of an asset or liability, reflecting current market conditions and valuation techniques.
Business Valuation
The process of determining the economic value of a business enterprise or ownership interest using various valuation techniques.
- Determine the fair value of non-controlling interest and its implications on consolidated financial statements.
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Learning Objectives
- Determine the fair value of non-controlling interest and its implications on consolidated financial statements.
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