Question

On January 1, 2018, Lowell Corp. acquired 80% of the voting common stock of Boston Inc. During the year, Lowell sold to Boston for $450,000 goods that cost $330,000. At year-end, Boston owned 15% of the goods transferred. Boston reported net income of $204,000, and Lowell's net income was $806,000. Lowell decided to use the equity method to account for this investment. Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, what was the net income attributable to the noncontrolling interest

Answer 1

Answer:

$40,800

Explanation:

The computation of  the net income is shown below:-

With regard to non-controlling interest, Lowell Corp. and the non-controlling interest divided Boston net profits proportionately to their ownership interests.

Non controlling interest share of consolidated net income = Boston net income × Remaining percentage

= $204,000 × (100% - 80%)

= $204,000 × 20%

= $40,800

Therefore for computing the Non controlling interest share of consolidated net income we simply multiply the Boston net income with remaining percentage.