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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Definitions:

Proton

A subatomic particle found in the nucleus of an atom, carrying a positive electric charge and contributing to the atomic number and mass of the atom.

Neutron

A subatomic particle found in the nucleus of an atom that has no electrical charge and a mass slightly larger than that of a proton.

Medial

Positioned towards the midline of the body.

Pod/o

A prefix related to feet, utilized in medical terminology to describe conditions, procedures, or anatomical parts concerning the foot.