Illustration 2. Non-Controlling Interest
On January 1, 2021, Inahan Co. acquired 75% of the voting shares of Bunso, Inc. As of this date,
the carrying amounts and fair values of the assets and liabilities of Bunso acquired by Inahan
are shown below:
On the negotiation for the business combination, Inahan Co. incurred the following
transaction costs: P65,000.00 for legal fees; P 125,000.00 for due diligence costs and P 60,000.00
for the general administrative costs of maintaining an internal acquisitions department.
Case 1: Non-Controlling Interest measured at fair value
Inahan Co. elects the option to measure the non-controlling interest at fair value. The
independent consultant engaged by Inahan Co. determined that the fair value of the 25%
non-controlling interest in Bunso, Inc. is P600,000.00. Inahan paid P 1,500,000.00 cash and P
750,000.00 land with fair value of P 1,000,000.00 as consideration for the 75% interest in Bunso,
Inc.
1.How much is the transaction costs incurred during the business combination?
a. 65,000.00
b. 125,000.00
c. 190,000.00
d. 250,000.00
2.How much is the Consideration Transferred by Inahan for its interest in Bunso?
a. 750,000.00
b. 2,250,000.00
c. 2,500,000.00
d. 3,250,000.00
3.How much is the Non-Controlling Interest in the acquiree?
a. 0.00
b. 600,000.00
c. 652,500.00
d. 833,333.33
Extracted text: Asset Carrying Amount Fair Value Petty Cash Fund 10,000.00 10,000.00 Receivables 1,250,000.00 850,000.00 Allowance for Doubtful AcCounts (350,000.00) Inventory Building 1,800,000.00 1,500,000.00 2,350,000.00 2,000,000.00 Accum. Depr.– Building (550,000.00) Goodwill 350,000.00 200,000.00 Total Assets 4,860,000.00 4,560,000.00 Liabilities Payables 1,750,000.00 1,750,000.00