Question

Bauerly Co. owned 70% of the voting common stock of Devin Co. During 2012, Devin made frequent sales of inventory to Bauerly. There were unrealized gains of $40,000 in the beginning inventory and $25,000 of unrealized gains at the end of the year. Devin reported net income of $137,000 for 2012. Bauerly decided to use the equity method to account for the investment. What is the non-controlling interest's share of Devin's net income for 2012

Answer 1

$ $

Net Income (137000*30%) (a) 41,100

Add:

Unrealized gains in the beginning inventory 40,000

Unrealized gains at the end of the year 25,000

Difference 15,000

(NCI in Unrealized gain (15,000*30%) (b) 4,500

Non-controlling interest's share of Devin's net income for 2012 ($41,100+$4,500) 45,600

Non-controlling interest's share of Devin's net income for 2012= $45,600

Step-by-step explanation: