Minority Interest - FRA EOC p169 Q26


Any idea why the minority interest in the answer is 320 million?

I guess it’s because the parent pay 320m for 50% which implies MI is 320m represent another 50%. But i thought MI = Fair value of Net Asset x (1 - ownership) = (Total Assets - Total Liabilities)(50%) = (1070 - 490)x50% = 290m


Another query is that in Q29 the answer implies that consolidation with full goodwill and consolidation with partial goodwill produce the same return on equity, but my understanding is that equity will be larger under full goodwill, is that right?!

first question: NCI = NCI proportionate share of the subsidiary’s FAIR VALUE. In this case, since 320m was paid for 50% stake, the implied fair value is 640m.

The poster above me answered this rightly.

Yes, equity should be different under Full Goodwill and Partial Goodwill. Equity will higher under Full Goodwill (because of higher NCI) when there’s goodwill. Since, there is no goodwill because the excess of implied fair value of the firm over fair value of net identifiable assets of the acquiree is allocated to previously unrecorded licenses. (Intangible asset)

In this question, the book value of the acquiree’s equity is equal to its fair value so there are no fair value differences.