Chase Company Owns 80% of Lawrence Company and 40% of Ross

question 56

Multiple Choice

Chase Company owns 80% of Lawrence Company and 40% of Ross Company. Lawrence Company also owns 30% of Ross Company. Separate operating incomes for 2013 of Chase, Lawrence, and Ross are $450,000, $300,000, and $250,000, respectively. Each company also retains a $20,000 unrealized gain in their current income figures. Annual amortization expense of $15,000 is assigned to Chase's investment in Lawrence and another $15,000 is assigned to Lawrence's investment in Ross.
Compute the non-controlling interest in Ross' net income for 2013.

• A) $92,000.
• B) $77,400.
• C) $75,000.
• D) $64,500.
• E) $69,000.

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Definitions:

Retained Earnings

Retained earnings refer to the portion of net income left over after dividends are paid out to shareholders, which is reinvested into the company.

Retroactive Restatement

Adjusting previously reported financial statements to reflect better understanding or corrections of past errors.

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.

Common Stock

Represents ownership shares in a corporation, giving holders a claim on part of the company’s assets and earnings.