A Parent and Its 80 Percent-Owned Subsidiary Have Made Several

question 37

Multiple Choice

A parent and its 80 percent-owned subsidiary have made several intercompany sales of noncurrent assets during the past two years.The amount of income assigned to the noncontrolling interest for the second year should include the noncontrolling interest's share of gains:

• A)unrealized in the second year from upstream sales made in the second year.
• B)realized in the second year from downstream sales made in both years.
• C)realized in the second year from upstream sales made in both years.
• D)both realized and unrealized from upstream sales made in the second year.

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Definitions:

Materials Cost

Materials cost refers to the total expense of raw materials and components used in the manufacturing process of goods.

Equivalent Units

A term used in cost accounting to express the amount of work done during a period by components that were not finished, converting partially completed goods into the equivalent of fully completed units.

Weighted Average Method

An inventory costing method that averages the cost of inventory items to determine the value of goods sold and ending inventory.

Production Period

The phase in which a company is engaged in the creation or manufacturing of goods.