IFRS Permits Several Methods to Be Used to Determine the Fair

question 13

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 may be valued at the fair value of the subsidiary's identifiable net assets.

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Definitions:

Conventional Level

According to Kohlberg, a period during which moral judgments largely reflect social rules and conventions.

Intellectual Spurt

A significant and rapid increase in a person's cognitive abilities or knowledge, often occurring during developmental stages.

Decentration

Simultaneous focusing (centering) on more than one aspect or dimension of a problem or situation.

Concrete Operational

A stage in Piaget's theory of cognitive development (ages 7-12) where children gain a better understanding of concrete events and logical operations, but struggle with abstract concepts.