A parent acquires 70% of a subsidiarys common stock and 60 percent of its preferred stock. The preferred stock is noncumulative. The current years dividend was paid. How is the noncontrolling interest in the subsidiarys net income assigned?

Multiple Choice

• The noncontrolling interest in consolidated net income is assigned as 40 percent of the value of the preferred stock, based on an allocation between common stock and preferred stock and their relative par values.

• There is no allocation to the noncontrolling interest because there are no dividends in arrears.

• The noncontrolling interest in consolidated net income is assigned as 40 percent of the preferred stock dividends.

• The noncontrolling interest in consolidated net income is assigned as 40 percent of the preferred stock dividends plus 30% of the subsidiarys income after subtracting all preferred stock dividends.

• The noncontrolling interest in consolidated net income is assigned as 30 percent of the subsidiarys income after subtracting 60% of preferred stock dividends.