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Compute the valuation of the non-controlling interest

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Question - JULIE Company acquired 80% of the outstanding shares of KRIS Company for $450,000; which included a control premium of $25,000, on January 1, 2019 when the net assets of KRIS amounted to $400,000.

On the date of acquisition KRIS Company's net assets had book values equal to their values except for inventory which was understated by $25,000 (20% of the goods were sold in 2020) and an equipment with a remaining 5-year life was understated by $50,000.

The non-controlling interest is to be valued at fair value. On December 31, 2021, KRIS Company reports capital stock of $200,000, share premium of $200,000 and retained earnings of $300,000.

Compute the valuation of the non-controlling interest in the consolidated financial statements on December 31, 2021.

a) 160,250

b) 129,000

c) 161,500

d) 155,250

Reference no: EM132806091

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