Chase Company owns 80% of Lawrence Company and 40% of Ross Company. Lawrence Company also owns 30% of Ross Company. Separate company net incomes for 2021 of Chase, Lawrence, and Ross are $450,000, $300,000, and $250,000, respectively. Each company also defers a $20,000 intra-entity gain in its current income figures. Excess annual amortization expense of $15,000 is assigned to Chase's investment in Lawrence and another $15,000 is assigned to Lawrence's investment in Ross.Compute the net income attributable to the noncontrolling interest in Ross for 2021.
A) $92,000.
B) $77,400.
C) $75,000.
D) $64,500.
E) $69,000.

Question

Quizplus · Accepted Answer

The net income attributable to the noncontrolling interest in Ross is calculated by first adjusting Ross's net income for the intra-entity gain and excess amortization, then determining the portion attributable to the noncontrolling interest. Ross's adjusted net income is $250,000 - $20,000 (intra-entity gain) - $15,000 (excess amortization) = $215,000. The noncontrolling interest is 30% (100% - 40% - 30%) of $215,000, which equals $64,500.

Chase Company Owns 80% of Lawrence Company and 40% of Ross