Jackson acquires 70% of Storm on January 1, 2021. At acquisition date the book value of all of Stern's assets and liabilities equaled their fair value, with the exception of Equipment (10 year remaining life) that had a book value o $500,000 and a fair value of $800,000.

FINANCIAL ACCOUNTING
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ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Jackson acquires 70% of Storm on January 1, 2021. At
acquisition date the book value of all of Stern's assets and
liabilities equaled their fair value, with the exception of
Equipment (10 year remaining life) that had a book value of
$500,000 and a fair value of $800,000.
For full year 2021, Stern had net income of $400,000. How
much is NCI share of Stern net income for 2021?
Transcribed Image Text:Jackson acquires 70% of Storm on January 1, 2021. At acquisition date the book value of all of Stern's assets and liabilities equaled their fair value, with the exception of Equipment (10 year remaining life) that had a book value of $500,000 and a fair value of $800,000. For full year 2021, Stern had net income of $400,000. How much is NCI share of Stern net income for 2021?
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NCI refers to the amount of shares held by a company other than the parent company if the company does not acquire 100% of equity. Normally these shareholders have a minority interest in the company and are valued at fair value on the date of acquisition. It is the percentage of shares which are held by other shareholder, For example  Company X owns of 80% shares of Y limited, then 20% is non controlling interest because that share must be held by other shareholders of Y limited. After the date of acquisition NCI can be valued the at fair value of subsidiary net assets plus the proportionate amount of share in net income minus the amount of dividend post acquisition date.



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