The Following Information Pertains to the Shareholdings of an Affiliated

question 60

Multiple Choice

The following information pertains to the shareholdings of an affiliated group of companies. The respective ownership interest of each company is outlined below. A Inc.:
A Inc. owns 75% of J Inc. and 60% of G Inc.
J Inc.:
J Inc. owns 60% of D Inc. and 20% of G Inc.
G Inc.:
G Inc. owns 10% of D Inc. and 80% of Y Inc.
All intercompany investments are accounted for using the equity method.
The Net Incomes for these companies for the year ended December 31, 2020 were as follows:
$$\begin{array} { | l | r | } \hline \text { A Inc. } & \$ 1,000,000 \\\hline \text { J Inc. } & \$ 200,000 \\\hline \text { G Inc. } & \$ 600,000 \\\hline \text { D Inc. } & \$ 300,000 \\\hline \text { Y Inc. } & \$ 100,000 \\\hline\end{array}$$ Unrealized intercompany profits (pre-tax) earned by the various companies for the year ended December 31, 2020 are shown below:
$$\begin{array} { | l | l | } \hline \text { G Inc. } & \$ 10,000 \\\hline \text { Y Inc. } & \$ 10,000 \\\hline \text { J Inc. } & \$ 20,000 \\\hline\end{array}$$ All companies are subject to a 25% tax rate.
How much is the non-controlling interest in A Inc.'s Consolidated Net Income for 2020?

• A) Nil
• B) $382,500
• C) $373,875
• D) $400,000

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Definitions:

Financing Statement

A document filed to give public notice of a secured creditor's interest in the property of a debtor, usually used in securing personal property transactions.

Secured Party

A lender or investor who has a legal right or interest in collateral pledged by a borrower to secure repayment of a loan.

Revised Article 9

An update to the Uniform Commercial Code that deals with secured transactions, outlining the rules regarding the granting of a security interest in personal property.

UCC

An all-encompassing body of laws, known as the Uniform Commercial Code, administers the conduct of commercial transactions throughout the United States.