IFRS Permits Several Methods to Be Used to Determine the Fair

question 42

Multiple Choice

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.

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Definitions:

Price Elasticity

The measure of responsiveness of the quantity demanded or quantity supplied of a good to a change in its price.

Daytona 500

An iconic annual NASCAR Cup Series motor race held in Daytona Beach, Florida, known as "The Great American Race."

Price Elasticity of Supply

A measure of how much the quantity supplied of a good responds to a change in the price of that good.

Price Elasticity of Demand

A measure of how the quantity demanded of a good changes in response to a change in its price, indicating its sensitivity to price changes.