Angela, Inc., holds a 90 percent interest in Corby Company. During 2017, Corby sold inventory costing $118,300 to Angela for $182,000. Of this inventory, $56,200 worth was not sold to outsiders until 2018. During 2018, Corby sold inventory costing $123,200 to Angela for $224,000. A total of $55,000 of this inventory was not sold to outsiders until 2019. In 2018, Angela reported separate net income of $230,000 while Corby's net income was $98,000 after excess amortizations. What is the noncontrolling interest in the 2018 income of the subsidiary?
UNREALIZED GROSS PROFIT, (2017)
Ending inventory $56,200
Gross profit = Sales - Cost of goods sold
= 182,000 - 118,300
= $63,700
Gross profit rate = Gross profit/Sales
= 63,700/182,000
= 35%
Unrealized intra-entity gross profit, (2017) = 56,200 x
35%
= $19,670
UNREALIZED GROSS PROFIT, (2018)
Ending inventory = $55,000
Gross profit = Sales - Cost of goods sold
= 224,000 - 123,200
= $100,800
Gross profit rate = Gross profit/Sales
= 100,800/224,000
= 45%
Unrealized intra-entity gross profit = 55,000 x 45%
= $24,750
NET INCOME ATTRIBUTABLE TO NON-CONTROLLING INTEREST
Reported net income for 2018 = $98,000
Realized gross profit deferred in 2017 = 19,670
Deferral of 2018 unrealized gross profit = - 24,750
Realized net income of subsidiary = 98,000 + 19,670 - 24,750
= $92,920
Outside ownership = 10%
Hence, Non-controlling interest = $92,920 x 10%
= $9,292
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Angela, Inc., holds a 90 percent interest in Corby Company. During 2017, Corby sold inventory cos...
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