Question

1. A parent owns 80% of its subsidiary's voting stock. At the end of the year, the parent's ending inventory includes $20,000 in unconfirmed profit on merchandise purchased from the subsidiary. The parent's beginning inventory included unconfirmed profit of $14,000 on merchandise purchased from the subsidiary. The subsidiary's ending inventory includes $50,000 in unconfirmed profit on merchandise purchased from the parent. The subsidiary's beginning inventory included $30,000 in unconfirmed profit on merchandise purchased from the parent. What is the effect of the above information on noncontrolling interest in net income for the year, reported on the consolidated income statement? A. Decrease of $1,200 B. Decrease of $4,000 C. Increase of $4,000 D. Increase of $2,800

Answer 1

Answer:

B decrease of $4000

Explanation:

$2000 x 0.2%