If you own 60% of a company valued at $100, what is the Noncontrolling Interest?

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Enhance your accounting skills for the PSIA Accounting Exam. Use flashcards and multiple-choice questions to prepare effectively with hints and explanations. Get set for your exam success!

Multiple Choice

If you own 60% of a company valued at $100, what is the Noncontrolling Interest?

Explanation:
Noncontrolling interest represents the portion of a subsidiary not owned by the parent. If you own 60% of a company valued at 100, the remaining 40% is owned by others. In consolidation, you combine 100% of the subsidiary’s equity but allocate 60% to your ownership and 40% to the noncontrolling interest. So the noncontrolling interest is 40% of 100, which equals 40.

Noncontrolling interest represents the portion of a subsidiary not owned by the parent. If you own 60% of a company valued at 100, the remaining 40% is owned by others. In consolidation, you combine 100% of the subsidiary’s equity but allocate 60% to your ownership and 40% to the noncontrolling interest. So the noncontrolling interest is 40% of 100, which equals 40.

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