Question

What is the impact on the non-controlling interest of a subsidiary when there are downstream transfers of inventory between the parent and subsidiary companies? Select one: A. Any resulting gain or loss is reported (in total) in the current period income statement. B. A pro rata portion of deferred gain or loss is recognized in the income statement. C. Any cash received is reported in Accumulated Other Comprehensive Income. D. There is no impact on the non-controlling interest of a subsidiary.

Answer 1

Answer: D. There is no impact on non controlling interests of a subsidiary

Explanation: Non controlling interest is a owner's position on outstanding shares which is less than 50%, it is also known as minority shares. Non controlling interests lack voting right to take decisions.

Non controlling interests of a subsidiary does not have any impact on the patent company. Like in this case the non controlling interests of the subsidiary, when there are downstream transfers of inventory between the parent company there will be no impact on the non controlling interests.