Question

Which of the following statements related to noncontrolling interest is incorrect? a. Noncontrolling interest in net income is reported as an expense on the income statement. b. Noncontrolling interest is sometimes called minority interest. c. Noncontrolling interest is the portion of equity interest in a subsidiary not attributable to the parent company. d. Consolidated net income is allocated to the parent and to the noncontrolling interest in proportion to their appropriate percentages of ownership.

Answer 1

Answer:

The correct answer is letter "A": Non-controlling interest in net income is reported as an expense on the income statement.

Explanation:

Non-controlling interest (NCI) is any percentage of ownership that is less than 50% of a company's voting equity. Theoretically, the non-controlling interest lacks power and control while influencing business management or operation. The NCI excess income is usually posted to a goodwill account in the consolidated financial statements. Over time, goodwill is amortized into an expense account.