Advance Accounting: Noncontrolling Interest's Share Computed
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The parent company acquires all of a subsidiary's common stock but only 70% percent of its preferred shares. This preferred stock pays a 7 percent annual cumulative dividend. No dividends are in arrears at the current time. How is the noncontrolling interest's share of the subsidiary's income computed? Explain?
A: As 30 percent of the subsidiary's preferred dividend.
B: No Allocation is made because the dividends have been paid.
C: As 30 percent of the subsidiary's income after all dividends have been subtracted.
D: Income Is assigned to the preferred stock based on total par value and 30 percent of that amount is allocated to the noncontrolling interest.
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The solution explains how the noncontrolling interest's share of the subsidiary's income computed.
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ANSWER: D: Income Is assigned to the preferred stock based on total par value and 30 percent of that amount is allocated to the noncontrolling ...
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