Perry, Inc.owns a 90% interest in Brown Corp.During 2016, Brown sold $100,000 in merchandise to Perry at a 30% gross profit.Ten percent of the goods are unsold by Perry at year end.The non-controlling interest will receive what gross profit as a result of these sales?

Question

Perry, Inc.owns a 90% interest in Brown Corp.During 2016, Brown sold $100,000 in merchandise to Perry at a 30% gross profit.Ten percent of the goods are unsold by Perry at year end.The non-controlling interest will receive what gross profit as a result of these sales?​

Quizplus · Accepted Answer

The total gross profit on the sale of $100,000 merchandise by Brown Corp is $30,000 (30% of $100,000). As Perry, Inc. owns a 90% interest in Brown Corp, it received $27,000 (90% of $30,000) as gross profit. The remaining 10% gross profit ($3,000) belongs to the non-controlling interest, which is not affected by the fact that 10% of the goods are unsold by Perry at year-end. Therefore, the non-controlling interest will receive $3,000 as gross profit.