Harry Co. acquired 75% of Samir Ltd. 3 years ago. In calculating the balance for the non-controlling interest share of net income, Harry started with the net income from Samir's current year-end single-entity financial statements. Which of the following adjustments must be added to Samir's net income in calculating NCI's share of net income?
A)Unrealized gain on an upstream sale of a capital asset.
B)Realized profits in the current year on upstream sales of inventory from the previous year.
C)Unrealized profit on upstream sales of inventory in the current year.
D)Amortization of fair value increments.

Question

Quizplus · Accepted Answer

Realized profits in the current year on upstream sales of inventory from the previous year should be added back to Samir's net income when calculating the NCI's share of net income, as these profits are now realized and should be included in the income attributable to the NCI.

Harry Co Acquired 75% of Samir Ltd