Belzer Co Owns 70% of Sabo Ltd

question 11

Multiple Choice

Belzer Co. owns 70% of Sabo Ltd. At the beginning of 20X7, Sabo sold a piece of equipment to Belzer for a gain of $35,000. At that time, the equipment had an estimated useful life of seven years.
-Which of the following statements is true about calculating the NCI for the consolidated SFP?

• A)The unrealized profit at the end of 20X7 must be deducted from the subsidiary's net carrying value before calculating the NCI.
• B)The unrealized profit at the end of 20X7 must be added to the subsidiary's net carrying value before calculating the NCI.
• C)The unrealized profit does not affect the NCI calculation because this is an upstream sale.
• D)There is no unrealized profit in the transaction.

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Definitions:

Equity Theory

A theory of motivation and fairness that explains how individuals perceive and act upon their sense of equity or inequity within interpersonal relationships.

Equity Theory

A theory of motivation that suggests employees are motivated to achieve fairness in the distribution of rewards and resources within the workplace.

Equity Sensitivity

The tendency for people to have different preferences for equity and to react differently to perceptions of inequity.

Transferring To Another Job

The process of moving an employee from one position to another within an organization, usually to match skills with job requirements or for developmental purposes.