Peabody Company owns 90% of the outstanding capital stock of Sloane Company. Dur

Question

Peabody Company owns 90% of the outstanding capital stock of Sloane Company. During 2014 and 2015 Sloane Company sold merchandise to Peabody Company at a markup of 25% of selling price. The selling price of the merchandise sold during the two years was $20,800 and $25,000, respectively. At the end of each year, Peabody Company had in its inventory one-fourth of the goods purchased that year from Sloane Company. Sloane Company reported net income of $30,000 in 2014 and $35,000 in 2015.

Determine the amount of the noncontrolling interest in consolidated income to be reported for 2014 and 2015.

Explanation / Answer

Particulars 2014 2015 Sales    $20,800 $25,000 Markup-25% on sale price $5200 $6,250 Closing stock is 1/4th goods purchased So Markuup on closing stock $1,300 $1,562.5 Net Income $30,000 $35,000 Less:Markup on Inventory $1,300 $1,562.5 $28,700 $33,437.5 Non Controling Interest in net income-1/10th of the above $2,870 $3,343.75

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