Detailed Answer
(d) The percentage of the subsidiary’s stockholders’
equity not owned by the parent represents the noncontrolling
interest’s share of the fair value of net assets of the subsidiary.
The fair value of the noncontrolling interest is measured at the
acquisition date, and adjusted in future periods for the portion of
the acquiree’s income and dividends attributable to the noncontrolling
interest. Therefore, the noncontrolling interest at
12/31/Y1 is calculated as follows:
Fair value of noncontrolling interests $250,000
Plus: Share of net income ($190,000 × 20%) 38,000
Less: Share of dividends ($125,000 × 20%) (25,000)
Noncontrolling interest 12/31/Y1 $263,000