Konin Corporation (KC) acquires a 75% interest in Bartovia Corporation (BC), in exchange for cash of €360,000. BC has 25% of its shares traded on an exchange; KC acquired the 60,000 non-publicly traded shares outstanding, at €6 per share. The fair value of BC’s identifiable net assets is €300,000; the shares of BC at the acquisition date are traded at €5 per share. •Under the full fair value approach, the non-controlling interest is measured based on the trading price of the shares of entity BC at the date control is obtained by KC (€5 per share) and a value of €100,000 is assigned to the 25% non-controlling interest, indicating that KC has paid a control premium of €60,000 (€360,000 – [€5 × 60,000]): •Equity Non-controlling interest in net assets €5×20,000 = €100,000
Konin Corporation (KC) acquires a 75% interest in Bartovia Corporation (BC), in exchange for cash of €360,000. BC has 25% of its shares traded on an exchange; KC acquired the 60,000 non-publicly traded shares outstanding, at €6 per share. The fair value of BC’s identifiable net assets is €300,000; the shares of BC at the acquisition date are traded at €5 per share. •Under the full fair value approach, the non-controlling interest is measured based on the trading price of the shares of entity BC at the date control is obtained by KC (€5 per share) and a value of €100,000 is assigned to the 25% non-controlling interest, indicating that KC has paid a control premium of €60,000 (€360,000 – [€5 × 60,000]): •Equity Non-controlling interest in net assets €5×20,000 = €100,000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Konin Corporation (KC) acquires a 75% interest in Bartovia Corporation (BC), in exchange for cash of €360,000. BC has 25% of its shares traded on an exchange; KC acquired the 60,000 non-publicly traded shares outstanding, at €6 per share. The fair value of BC’s identifiable net assets is €300,000; the shares of BC at the acquisition date are traded at €5 per share.
•Under the full fair value approach, the non-controlling interest is measured based on the trading price of the shares of entity BC at the date control is obtained by KC (€5 per share) and a value of €100,000 is assigned to the 25% non-controlling interest, indicating that KC has paid a control premium of €60,000 (€360,000 – [€5 × 60,000]):
•Equity Non-controlling interest in net assets €5×20,000 = €100,000
CAN YOU EXPLAIN HOW WE GOT THE ALL OF THE NUMBERS STEP BY STEP BECAUSE I STILL DON'T UNDERSTAND :)
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