A Parent Company Regularly Sells Merchandise to Its 70%-Owned Subsidiary

question 23

Multiple Choice

A parent company regularly sells merchandise to its 70%-owned subsidiary.Which of the following statements describes the computation of noncontrolling interest share?

• A)The subsidiary's net income times 30%
• B)(The subsidiary's net income × 30%)+ unrealized profits in the beginning inventory - unrealized profits in the ending inventory
• C)(The subsidiary's net income + unrealized profits in the beginning inventory - unrealized profits in the ending inventory)× 30%
• D)(The subsidiary's net income + unrealized profits in the ending inventory - unrealized profits in the beginning inventory)× 30%

---

Definitions:

Total Value

The overall financial value of an entity or asset, calculated by summing all components of worth.

Lump Sum Payment

A large, one-time payment made for a particular purpose, rather than a series of smaller installments.

Compounded Annually

Interest on an investment or loan is calculated annually on both the initial principal and previously accumulated interest.

Loan

Borrowed capital that is expected to be repaid with interest by the borrower to the lender at a future date.