On July 8th, 2013 LVMH purchased 80% of Loro Piana (luxury Italian cashmere brand) for $2.8 billion.
Question:
On July 8th, 2013 LVMH purchased 80% of Loro Piana (luxury Italian cashmere brand) for $2.8 billion. The fair value of Loro Piana’s identifiable assets and liabilities on that date were as follows:
Million $
Current Assets 500
Brand 1,500
Fixed Assets 1,000
Liabilities 1,300
The remaining 20% interest remained in Loro Piana family’s hands.
Part I - Required:
1. LVMH applied the proportionate share method to account for its acquisition of Loro Piana. How much noncontrolling interest and goodwill did LVMH recognize on July 8th, 2013?
2. How would you change your previous answer if LVMH applied the fair value method?
College Accounting Chapters 1-30
ISBN: 978-0077862398
14th edition
Authors: John Price, M. David Haddock, Michael Farina