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Question
The Collins Company paid $1,050,000 to purchase 70% of Revsine Company's outstanding common stock on July 1, 2012. Revsine's balance sheet on the acquisition date reported net assets totaling $1,200,000. Revsine's land had a fair value which was $175,000 greater than book value, while the inventory's fair value exceeded its book value by $67,500. Immediately after the acquisition of the Revsine stock, Collins reported net assets of $5,785,000.
Required:
1. Determine the consolidated net assets total as of July 1, 2012 using the acquisition method of accounting.
2. Determine the amount of noncontrolling interest to be reported on the July 1, 2012 balance sheet. How is the noncontrolling interest reported within the consolidated balance sheet? Assume that the acquisition method of accounting is applicable.
Answer
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