River Co. owned 80% of Boat Inc. The two companies filed a consolidated income tax return and River used the initial value method to account for the investment. The following information was available from the two companies' financial statements: Operating income included net unrealized gains, which are associated with transfers of inventories between the two companies, but it did not include dividends received from a subsidiary. The income tax rate was 30%.
-What was the noncontrolling interest in Boat Inc.'s net income, assuming that the separate return method was used?

Question

River Co. owned 80% of Boat Inc. The two companies filed a consolidated income tax return and River used the initial value method to account for the investment. The following information was available from the two companies' financial statements:  Operating income included net unrealized gains, which are associated with transfers of inventories between the two companies, but it did not include dividends received from a subsidiary. The income tax rate was 30%.
-What was the noncontrolling interest in Boat Inc.'s net income, assuming that the separate return method was used?

Quizplus · Accepted Answer

The Answer is B

River Co Owned 80% of Boat Inc