Asked by
Lucero Crusoe
on Oct 16, 2024
Verified
HRN Enterprises Inc. (HRN) purchases 80% of the outstanding voting shares of NHR Inc. on January 1, 2018. HRN is using the fair value enterprise (FVE) consolidation method. On that date, which of the following statements pertaining to the non-controlling interest (NCI) is TRUE?
A) HRN's non-controlling interest (NCI) account will include 20% of the book value of NHR's net assets, 20% of the fair value excess and 20% of the goodwill.
B) HRN's non-controlling interest (NCI) account will include 20% of the book value of NHR's net assets.
C) HRN's non-controlling interest (NCI) account will include 20% of the acquisition differential on the date of acquisition.
D) HRN's non-controlling interest (NCI) account will include 20% of the book value of NHR's net assets and 20% of the fair value excess.
Acquisition Differential
The excess of the cost of acquisition over the fair value of the net assets acquired in a business combination, often attributed to intangibles like goodwill.
- Learn the process of managing non-controlling interests (NCI) through various consolidation models.
Verified Answer
MD
Learning Objectives
- Learn the process of managing non-controlling interests (NCI) through various consolidation models.