Question

Big Corporation receives management consulting services from its 95 percent owned subsidiary, Small Inc. For the year 20X8, Small billed Big $140,000. Small's labor cost and other associated costs for the employees providing services to Big totaled $121,000 in 20X8. Big reported $2,567,000 of income from its own separate operations for 20X8, and Small reported net income of $695,000. Based on the preceding information, what amount of income should be assigned to the noncontrolling shareholders in the consolidated income statement for 20X8

Answer 1

Answer: $34750

Step-by-step explanation:

The amount of income should be assigned to the noncontrolling shareholders in the consolidated income statement for 20X8 will be:

Net income of Small = $695,000

Bug company's share = 95% × $695000 = $660250

Therefore, non controlling shareholders at 5% will be:

= 5% × Net income of Small

= 5% × $695000

= 0.05 × $695000

= $34750