Shalles Corporation,an 80%-owned subsidiary of Pani Corporation,sold inventory items to its parent at a $48,000 profit in 2014.Pani resold one-third of this inventory to outside entities.Shalles reported net income of $200,000 for 2014.Noncontrolling interest share of consolidated net income that will appear in the income statement for 2014 is

Question

Quizplus · Accepted Answer

The noncontrolling interest's share of consolidated net income is calculated as follows:

Net income attributable to Shalles Corporation = $200,000
Profit on intercompany sale = $48,000
Profit on third-party sales = $48,000 x 1/3 = $16,000

Total consolidated net income = $200,000 + $48,000 - $16,000 = $232,000
Noncontrolling interest's share = 20% x ($232,000 - $48,000) = $33,600. Therefore, the correct answer is (C).

Shalles Corporation,an 80%-Owned Subsidiary of Pani Corporation,sold Inventory Items to Its