Pepe, Incorporated Acquired 60% of Devin Company on January 1

question 17

Multiple Choice

Pepe, Incorporated acquired 60% of Devin Company on January 1, 2010. On that date Devin sold equipment to Pepe for $45,000. The equipment had a cost of $120,000 and accumulated depreciation of $66,000 with a remaining life of 9 years. Devin reported net income of $300,000 and $325,000 for 2010 and 2011, respectively. Pepe uses the equity method to account for its investment in Devin.
-Compute the noncontrolling interest in the net income of Devin for 2011.

• A)$126,800.
• B)$132,000.
• C)$122,000.
• D)$130,000.
• E)$129,600.

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Definitions:

Statistical Stability

The property of a statistical measure to remain constant over time or across different samples.

Special Causes

Unusual, not predictable factors in a process that can cause variations and are not part of the process itself.

Common Cause Variation

Variation that is inherent in a process over time, caused by factors that are consistently and predictably present.

Control Charts

Visual tools used in statistical process control to monitor how a process changes over time, highlighting variations outside of predefined bounds.