Bauerly Co

question 2

Multiple Choice

Bauerly Co. owned 70% of the voting common stock of Devin Co. During 2010, Devin made frequent sales of inventory to Bauerly. There were unrealized gains of $40,000 in the beginning inventory, and $25,000 at the end of the year. Devin reported net income of $137,000 for 2010. Bauerly decided to use the equity method to account for the investment. What is the noncontrolling interest's share of Devin's net income for 2010?

• A) $41,100.
• B) $33,600.
• C) $21,600.
• D) $45,600.
• E) $36,600.

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Definitions:

FICA Taxes

Taxes imposed on both employees and employers to fund Social Security and Medicare in the United States.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within the normal operating cycle of a business, typically one year.

Short-Term Debt

Debt obligations that are due for repayment within one year.

Operating Cycle

The average period of time between the acquisition of inventory by a business and the receipt of cash from sales of the inventory, encompassing both the purchase of inventory and the collection of receivables.