A parent has a 60% interest in its subsidiary. Ending inventory profits on upstream merchandise sales:

a. Increase equity in net income and the noncontrolling interest in net income

b. Only reduce equity in net income

c. Reduce equity in net income and the noncontrolling interest in net income

d. Only increase equity in net income

22. A wholly-owned subsidiary sells merchandise to its parent at a markup of 25% on cost. During the current year, the parent paid $725,000 for merchandise received from the subsidiary. By year-end, the parent has sold $600,000 of the merchandise to outside customers for $900,000, but still holds the other $125,000 in its ending inventory. The parent uses the complete equity method to record its investment in subsidiary on its own books. What is the impact of the above information on the parents equity in net income of subsidiary for the year, as reported on the parents books?

a. Subtract $25,000

b. Add $25,000

c. Subtract $100,000

d. Add $100,000

23. An 80%-owned subsidiary sells merchandise to its parent at a markup of 25% on cost. During the current year, the parent paid $725,000 for merchandise received from the subsidiary. By year-end, the parent has sold $600,000 of the merchandise to outside customers for $900,000, but still holds the other $125,000 in its ending inventory. What is the impact of the above information on noncontrolling interest in net income, reported on the consolidated income statement for the year?

a. No effect

b. Subtract $5,000

c. Subtract $20,000

d. Subtract $25,000

24. A 90%-owned subsidiary sells merchandise to its parent at a markup of 20% on cost. The parents beginning inventory includes $120,000 purchased from the subsidiary. The parents ending inventory includes $156,000 purchased from the subsidiary. What is the impact of the above information on noncontrolling interest in net income, reported on the consolidated income statement for the year?

a. No effect

b. Subtract $6,000

c. Subtract $600

d. Subtract $3,600

25. A parent sells merchandise to its 90%-owned subsidiary at a markup of 20% on cost. The parents beginning inventory includes $120,000 purchased from the subsidiary. The parents ending inventory includes $156,000 purchased from the subsidiary. What is the impact of the above information on noncontrolling interest in net income, reported on the consolidated income statement for the year?

a. No effect

b. Subtract $6,000

c. Subtract $600

d. Subtract $3,000