A 70%-owned subsidiary company regularly sells merchandise to its parent (upstre

Question

A 70%-owned subsidiary company regularly sells merchandise to its parent (upstream transaction). Which of the following statements describes the computation of noncontrolling interest share? a. The subsidiary's net income times 30% b. (The subsidiary's net income × 30%) + unrealized profits in the beginning inventory - unrealized profits in the ending inventory c. (The subsidiary's net income + unrealized profits in the beginning inventory - unrealized profits in the ending inventory) × 30% d. (The subsidiary's net income + unrealized profits in the ending inventory - unrealized profits in the beginning inventory) × 30%

Explanation / Answer

In an Upstream transaction where a 70% owned subsidiary company regularily sells merchandise to its parent, the computation of noncontrolling interest share (a) The subsidiary's net income times 30%

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