Sub Company Sells All Its Output at 20 Percent Above

question 52

Multiple Choice

Sub Company sells all its output at 20 percent above cost to Par Corporation.Par purchases its entire inventory from Sub.The incomes reported by the companies over the past three years are as follows:
Sub Company sold inventory for $300,000,$262,500 and $337,500 in the years 20X6,20X7,and 20X8 respectively.Par Company reported ending inventory of $105,000,$157,500 and $180,000 for 20X6,20X7,and 20X8 respectively.Par acquired 70 percent of the ownership of Sub on January 1,20X6,at underlying book value.The fair value of the noncontrolling interest at the date of acquisition was equal to 30 percent of the book value of Sub Company.
-Based on the information given above,what will be the income to noncontrolling interest for 20X8?

• A)$39,750
• B)$37,875
• C)$71,275
• D)$70,875

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Conventional Sources

Traditional practices or methods commonly accepted and widely used in a particular field or industry.

Paperless Billing

A method of billing where bills are sent electronically through email or accessible via an online account, eliminating the need for physical paper bills.

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The long-term rise in Earth's average temperature, largely attributed to the increased levels of atmospheric carbon dioxide produced by the use of fossil fuels.

Short-termism

Emphasizing immediate outcomes over strategies that ensure long-term success.