A parent owns 80% of its subsidiary. At the beginning of 2019, the subsidiary sells equipment carried on its books at $40,000 to its parent for $50,000. The equipment has a 5-year remaining life, straight-line. What is the effect of the above on the noncontrolling interest in net income, reported on the consolidated income statement for 2020?

Question

Quizplus · Accepted Answer

Gain confirmed during the year = ($50,000 - $40,000)/5 = $2,000
$2,000 x 20% = $400 increase

A Parent Owns 80% of Its Subsidiary