A parent owns 80% of its subsidiary. At the beginning of the current year, the subsidiary sells equipment carried on its books at $100,000 to its parent for $120,000. The equipment has a 10-year remaining life, straight-line. What is the effect of the above on the noncontrolling interest in net income for the current year?

Question

Quizplus · Accepted Answer

Unconfirmed gain = $120,000 - $100,000 = $20,000
Gain confirmed during the year = $20,000/10 = $2,000
($2,000 - $20,000) x 20% = $3,600 decrease

A Parent Owns 80% of Its Subsidiary