MC Question 5
Pact acquired 80% of the equity shares of Sact on 1 July 2014, paying $3·00 for each share acquired.
This represented a premium of 20% over the market price of Sact’s shares at that date.
Sact’s shareholders’ funds (equity) as at 31 March 2015 were:
| $ | $ | ||
|---|---|---|---|
| Equity shares of $1 each | 100,000 | ||
| Retained earnings at 1 April 2014 | 80,000 | ||
| Profit for the year ended 31 March 2015 | 40,000 | 120,000 | |
220,000 | |||
The only fair value adjustment required to Sact’s net assets on consolidation was a $20,000 increase in the value of
its land.
Pact’s policy is to value non-controlling interests at fair value at the date of acquisition.
For this purpose the market price of Sact’s shares at that date can be deemed to be representative of the fair value of the shares held by the non-controlling interest.
What would be the carrying amount of the non-controlling interest of Sact in the consolidated statement of
financial position of Pact as at 31 March 2015?
A $54,000
B $50,000
C $56,000
D $58,000