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Consolidated Financial Statements/Intercompany Asset transactions

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Please help with the following problem involving financial statements.

Hardwood, Inc., holds a 90 percent interest in Pittstoni Company. During 2009, Pittstoni sold inventory costing $77,000 to Hardwood for $110,000. Of this inventory, $40,000 worth was not sold to outsiders until 2010. During 2010, Pittstoni sold inventory costing $72,000 to Hardwood for $120,000. A total of $50,000 of this inventory was not sold to outsiders until 2011. In 2010, Hardwood reported net income of $150,000 while Pittstoni reported $90,000. What is the noncontrolling interest in the 2010 income of the subsidiary?

a) 8,000
b) 8,200
c) 9,000
d) 9,800

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Solution Summary

This posting helps with a problem involving financial statements. The solution examines consolidated financial statements and intercompany asset transactions for Hardwood Inc. The answer is given in a chart.

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UNREALIZED GAIN, 12/31/05
Ending Inventory $40,000
Markup ($33,000/$110,000) 30%
Unrealized Intercompany Gain, 12/31/05 ...

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