Asset sale/inventory profits
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1.
A subsidiary sold a depreciable asset to the parent company at a profit in the current period. Will the income assigned to the noncontrolling interest in the consolidated income statement for the current period be more than, less than, or equal to a proportionate share of the reported net income of the subsidiary? Why?
2.
A subsidiary sold a depreciable asset to the parent company at a profit in the current period. Will the income assigned to the noncontrolling interest in the consolidated income statement for the current period be more than, less than, or equal to a proportionate share of the reported net income of the subsidiary? Why
3.
A subsidiary sold a depreciable asset to the parent company at a profit of $1,000 in the current period. Will the income assigned to the noncontrolling interest in the consolidated income statement for the current period be more if the intercorporate sale occurs on January 1 or on December 31? Why?
4-A
How will the elimination of unrealized intercompany inventory profits recorded on the parent's books affect consolidated retained earnings?
4-B
How will the elimination of unrealized intercompany inventory profits recorded on the subsidiary's books affect consolidated retained earnings?
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Solution Summary
Asset sales and inventory profits are examined. The reported net income of the subsidiary proportionate shares are determined.
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Question 1
The income assigned to the noncontrolling interest in the consolidated income statement is less than the proportionate share of the reported net income of the subsidiary. This is so because the unrealized profit from the upstream sale of the ...
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