Use the following information to answer the question(s) below.

Paint Corporation owns 82% of Achille Corporation and Achille Corporation owns 80% of Badrack Corporation. For the current year, the separate net incomes (excluding investment income) of Paint, Achille, and Badrack are $120,000, $100,000, and $50,000, respectively. The cost of each investment was equal to the book value of the investment, which was also equal to the fair value.

-Noncontrolling interest share for Achille is
A)$18,000.
B)$25,200.
C)$36,200.
D)$72,000.

Question

Use the following information to answer the question(s) below.

Paint Corporation owns 82% of Achille Corporation and Achille Corporation owns 80% of Badrack Corporation. For the current year, the separate net incomes (excluding investment income) of Paint, Achille, and Badrack are $120,000, $100,000, and $50,000, respectively. The cost of each investment was equal to the book value of the investment, which was also equal to the fair value.

-Noncontrolling interest share for Achille is
A)$18,000.
B)$25,200.
C)$36,200.
D)$72,000.

Quizplus · Accepted Answer

The formula to calculate noncontrolling interest (NCI) is NCI = NCI percentage x subsidiary net income. 
In this case, Achille owns 60% of the subsidiary, so the NCI percentage is 40%. 
Subsidiary net income is given as $63,000. 
Therefore, NCI = 40% x $63,000 = $25,200. 
Thus, the correct answer is B.

Use the Following Information to Answer the Question(s) Below