Perch Co Acquired 80% of the Common Stock of Float Corp

question 70

Multiple Choice

Perch Co. acquired 80% of the common stock of Float Corp. for $1,600,000. The fair value of Float's net assets was $1,850,000, and the book value was $1,500,000. The non-controlling interest shares of Float Corp. are not actively traded.
What is the dollar amount of non-controlling interest that should appear in a consolidated balance sheet prepared at the date of acquisition?

• A) $350,000.
• B) $300,000.
• C) $400,000.
• D) $370,000.
• E) $0.

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Definitions:

Expected Return

The projected average amount of profit or loss an investment is anticipated to generate, based on historical performance or probability analysis.

Risk-Free Rate

Risk-free financial gains, usually signified by government securities' yields.

Standard Deviation

A statistical measurement that depicts the variability or spread of a set of data points or investment returns around their mean.

Diversification

An investment strategy aimed at reducing risk by allocating investments among various financial instruments, industries, and other categories.