Question

X-Beams Inc. owned 70% of the voting common stock of Kent Corp. During 2013, Kent made several sales of inventory to X-Beams. The total selling price was $180,000 and the cost was $100,000. At the end of the year, 20% of the goods were still in X-Beams' inventory. Kent's reported net income was $300,000. What was the non-controlling interest in Kent's net income

Answer 1

$85,200

Step-by-step explanation:

Given that,

Total selling price = $180,000

Cost = $100,000

At the end of the year, 20% of the goods were still in X-Beams' inventory.

Net income = $300,000

Unrealized gain in inventory:

= (Total selling price - Cost) × Percent of goods still in inventory

= ($180000 - $100,000) × 20%

= $80,000 × 20%

= $16,000

Share of non controlling interest:

= 100 - 70%

= 30%

Non-controlling interest in Kent's net income:

= Share in net income - unrealized gain in inventory

= (30% × $300,000) - (30% × $16,000)

= $90,000 - $4,800

= $85,200