Anderson Company, a 90% Owned Subsidiary of Philbin Corporation, Transfers

question 41

Multiple Choice

Anderson Company, a 90% owned subsidiary of Philbin Corporation, transfers inventory to Philbin at a 25% gross profit rate. The following data are available pertaining specifically to Philbin's intra-entity purchases from Anderson. Anderson was acquired on January 1, 2020. Assume the equity method is used. The following data are available pertaining to Anderson's income and dividends.
Assuming there are no excess amortizations associated with the consolidation, and no other intra-entity asset transfers, compute the net income attributable to the noncontrolling interest of Anderson for 2020.

• A)$6,970.
• B)$7,000.
• C)$7,030.
• D)$6,270.
• E)$6,230.

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Definitions:

Payments

Transactions by which goods, services, or obligations are paid for through the transfer of money or its equivalents.

Compounded Monthly

A method where interest earned is added to the principal monthly, so that each subsequent interest calculation is made on a larger amount.

Retirement Savings Plan

A financial arrangement designed to help individuals save for their retirement, offering various tax advantages.

Contributions

Payments or deposits made into a particular fund or account for the purposes of investment or savings growth.