Question

1. An 80%-owned subsidiary sells land to its parent at a gain of $100,000. The following year, the parent sells the land to an outside entity for a gain of $10,000. How is the noncontrolling interest in net income affected in the year the parent sells the land? A. Increase of $20,000 B. No effect C. Decrease of $22,000 D. Decrease of $2,000

Answer 1

Answer: B. No effect

Explanation: A non controlling interest is that part of the share of a subsidiary company that the parent company has not claim to its ownership. This is different from a controlling interest which means it is the part of the subsidiary of a parent company,that the parent company owns.

THERE WILL BE NO EFFECT ON THE NONCONTROLLING INTEREST IN NET INCOME IN THE YEAR THE PARENT COMPANY SELLS THE LAND.