Question

14. Angela, Inc. purchased 80% interest of Corby Company two years ago in an acquisition that resulted in excess amortization of $10,000.  During 2018 Corby sold inventory costing $75,000 to Angela for $100,000.  Of this inventory, $20,000 was not sold to outsiders until 2019.  During 2019, Corby sold inventory costing $84,000 to Angela for $120,000.  A total of $25,000 of this inventory was not sold to outsiders until 2020.  In 2019, Angela reported separate net income of $150,000 while Corby’s net income was $50,000.  What is the NCI share in the 2019 net income of the subsidiary?

1. $7,000
2. $7,200
3. $7,500
4. $7,800

Answer 1

Answers Pgo calculate intra entily gross profit 1 - 2018 - inta entity gross profit of 2018 – ending inventory of wore x gross profit rate where, > Ending inventlery = $80,000 (not sold until 2019). gross profit rate = inventory sell price - inventory costprice inventory sell price = $ 100,000 - $75,000 $100,000 = F 5000 $100,000 = 0.25(01) 251 Now, .. substitute values in Eqn ☺ Cinnalized Biostra entity gross profit or 2018 = $ 20,000 X05). = $5,000 cal cukoate intra enfily gross profit df 2019 :- unrcalmed intra Entity gross profit of diq = Ending inventory of 2019

where, finding imeatlony = $25,000 (not sold untii acas). gross profit rote = inuentory sell price - Invertory cost price inventory sell price 20,000 -84,000 120,000 = 36,000 120,000 50:3 (0) 301 Now, substitute values in Eqn 2. Unrealided intrae entity gross, 19 = $25,000 X 391 = $ 7500 Now, find non controling interest(niet) shares in the 2019 net incoane dr subsidiary:- Amount Particulars Net income of corby's in diq. $50,000 Excessu amortization 10,400 Nicat income after anon ti clic. $40,000 Uncalized intro satisfy gross profit de 2018.n.calad in 2019 $5,000 unrealized infra Enlity 910.s_profit.. 2019 ($ 7,500) Receliacd akt income a subsidiary $37SOU 201 subsidiary ownership :1. (1004.-Angela ousneiship: 1. Nu share in 2019 Crealized net income d subsidiary x subsidiary thing $7,500

SO since share in 9019 - $7,500. 501 is correct answer.