Question

Under which set of circumstances would it not be appropriate to assume the value the noncontrolling shares is the same as the controlling shares?a. The acquisition is for less than 100% of the subsidiary.
b. The fair value of the of the noncontrolling shares can be inferred from the value implied by the acquisition price.
c. Active market prices for shares not obtained by the acquirer imply a different value.
d. The amount of the "control premium" cannot be determined .

Answer 1

Answer:

The correct answer is C

Explanation:

NCI stands for the Non-controlling interest which also called as the minority interest, it is defined as the position of ownership where the shareholder owns outstanding shares that is less than 50% and has no control on the  decisions.

Under the situation where the active prices for the shares are not acquired by the acquirer states a different value, it is not appropriate to assume the value of the non-controlling shares same as of the controlling shares.