In Measuring the Noncontrolling Interest Immediately Following the Date of Acquisition

question 116

Multiple Choice

In measuring the noncontrolling interest immediately following the date of acquisition, which of the following would not be indicative of the value attributed to the noncontrolling interest?

• A) Fair value based on stock trades of the acquired company.
• B) Subsidiary cash flows discounted to present value.
• C) Book value of subsidiary net assets.
• D) Projections of residual income.
• E) Consideration transferred by the parent company that implies a total subsidiary value.

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Definitions:

Psychological Dependency

A mental reliance on a substance, activity, or behavior that can lead to emotional distress or difficulty in functioning without it.

Shrinkage

the reduction in inventory due to factors such as theft, damage, or administrative errors, not sales.

Inventory Losses

The reduction in inventory due to factors such as theft, damage, or obsolescence, resulting in financial loss for a business.

Shoplifting

The unauthorized removal of goods from a retail establishment without payment, considered a form of theft.