Hi, im looking at Question 46 of the 2011 Level II CFAI Morning Session Mock, and have a question as to computing total shareholder’s equity after an acquisitin.
In the answers, they showed that the new total shareholder’s equity is the parent company’s original common stock + retained earnings + noncontrolling minority interest + the proportion of interest of the acquired company
They added this amount back to the parent’s capital stock, ie 67,200 + 280,000.
Why do you have to include the proportional controlling interest of the acquired company, in this case 67,200?
In the schweser notes, we are told post acquisition, the total shareholders equity is equal to the original parent’s shareholder equity + noncontrolling minority interest.
In the answers, they showed that the new total shareholder’s equity is the parent company’s original common stock + retained earnings + noncontrolling minority interest + the proportion of interest of the acquired company
They added this amount back to the parent’s capital stock, ie 67,200 + 280,000.
Why do you have to include the proportional controlling interest of the acquired company, in this case 67,200?
In the schweser notes, we are told post acquisition, the total shareholders equity is equal to the original parent’s shareholder equity + noncontrolling minority interest.