Kenzie Co Acquired 70% of McCready Co

question 86

Multiple Choice

Kenzie Co. acquired 70% of McCready Co. on January 1, 2021. During 2021, Kenzie made several sales of inventory to McCready. The cost and sales price of the goods were $150,000 and $220,000, respectively. McCready still owned one-fourth of the goods at the end of 2021. Consolidated cost of goods sold for 2021 was $2,280,000 due to a consolidating adjustment for intra-entity transfers less intra-entity gross profit in McCready's ending inventory.How would net income attributable to the noncontrolling interest be different if the transfers had been for the same amount and cost, but from McCready to Kenzie?

• A) Net income attributable to the noncontrolling interest would have decreased by $5,250.
• B) Net income attributable to the noncontrolling interest would have increased by $17,500.
• C) Net income attributable to the noncontrolling interest would have increased by $10,500.
• D) Net income attributable to the noncontrolling interest would have decreased by $15,750.
• E) Net income attributable to the noncontrolling interest would have decreased by $52,500.

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Definitions:

PTH

Parathyroid hormone, a key regulator of calcium levels in the blood and bone metabolism.

Parathyroid Gland

Small glands located behind the thyroid gland that play a critical role in regulating the body's calcium levels.

Luteinizing Hormone

A hormone produced by the anterior pituitary gland that plays a crucial role in regulating the menstrual cycle and ovulation in females and testosterone production in males.

Anterior Pituitary

A front part of the pituitary gland that produces and releases hormones which regulate various bodily functions.