Assume an Upstream Sale of Machinery Occurs on January 1,2014

question 1

Multiple Choice

Assume an upstream sale of machinery occurs on January 1,2014.The parent owns 70% of the subsidiary.There is a gain on the intercompany transfer and the machine has five remaining years of useful life and no salvage value.Straight-line depreciation is used.Which of the following statements is correct?

• A)Noncontrolling interest share for 2014 is equal to: subsidiary income for 2014 multiplied by 30%.
• B)Noncontrolling interest share for 2014 is equal to: (subsidiary income for 2014 minus the gain on sale plus the excess depreciation expense)multiplied by 30%.
• C)Noncontrolling interest share for 2014 is equal to: (subsidiary income for 2014 minus the gain on sale)multiplied by 30%.
• D)Noncontrolling interest share for 2014 is equal to: (subsidiary income for 2014 plus the excess depreciation expense)multiplied by 30%.

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