P Company Owns an 80% Interest in S Company

question 4

Multiple Choice

P Company owns an 80% interest in S Company.During 2017,S sells merchandise to P for $150,000 at a profit of $30,000.On December 31,2017,50% of this merchandise is included in P's inventory.Income statements for P and S are summarized below: Noncontrolling interest in income for 2017 is:

• A)$3,000.
• B)$14,400.
• C)$15,000.
• D)$18,000.

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Definitions:

Economic Profit

The net gain or loss after removing both easily identifiable and not readily apparent expenses from the overall turnover.

Price

The amount of money or compensation given in exchange for goods or services in a market.

Diagram

A simplified representation or drawing that illustrates relationships or processes, often used in economics to demonstrate concepts or data visually.

Economic Profit

The difference between total revenues and total costs, including both explicit and implicit costs, representing the additional benefit over the next best alternative.