Prescott Inc. owned 80% of the voting common stock of Hutchins Corp. During 2021, Hutchins made several sales of inventory to Prescott. The total selling price was $190,000 and the cost was $105,000. At the end of the year, 30% of the goods were still in Prescott's inventory. Hutchins's reported net income was $320,000. 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 in Hutchins?
A) $47,000.
B) $58,900.
C) $64,000.
D) $69,100.
E) $90,900.

Question

Quizplus · Accepted Answer

The noncontrolling interest owns 20% of Hutchins. The unrealized profit in ending inventory is $25,500 (30% of $85,000 profit). The noncontrolling interest's share of Hutchins's adjusted net income is 20% of ($320,000 - $25,500), which equals $58,900.