Pepe, Incorporated acquired 60% of Devin Company on January 1, 2012. On that date Devin sold equipment to Pepe for $45,000. The equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 and $325,000 for 2012 and 2013, respectively. Pepe uses the equity method to account for its investment in Devin.
Compute the non-controlling interest in the net income of Devin for 2013.
A) $126,800.
B) $130,000.
C) $122,000.
D) $130,800.
E) $129,600.

Question

Quizplus · Accepted Answer

(Sub's 2013 Income $325,000 - Second Year Recognition of Loss $1,000) $324,000 × .40 = $129,600 Sub's Income Reported by Parent

Pepe, Incorporated Acquired 60% of Devin Company on January 1