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 equity in net income, reported on the parents books, assuming the parent uses the complete equity method?

a. No effect

b. Subtract $6,000

c. Subtract $5,400

d. Subtract $27,000

27. A parent has a wholly-owned subsidiary. At the end of the year, the subsidiarys ending inventory includes $50,000 in unconfirmed profit on merchandise purchased from the parent. The subsidiarys beginning inventory included unconfirmed profit of $45,000 on merchandise purchased from the parent. The parents ending inventory includes $80,000 in unconfirmed profit on merchandise purchased from the subsidiary. The parents beginning inventory included $110,000 in unconfirmed profit on merchandise purchased from the subsidiary. What is the effect of the above information on the parents equity in net income of the subsidiary for the year, assuming the parent uses the complete equity method?

a. Decrease of $25,000

b. Increase of $25,000

c. Increase of $5,000

d. Decrease of $30,000

28. A parent owns 80% of its subsidiarys voting stock. At the end of the year, the subsidiarys ending inventory includes $20,000 in unconfirmed profit on merchandise purchased from the parent. The subsidiarys beginning inventory included unconfirmed profit of $14,000 on merchandise purchased from the parent. The parents ending inventory includes $50,000 in unconfirmed profit on merchandise purchased from the subsidiary. The parents beginning inventory included $30,000 in unconfirmed profit on merchandise purchased from the subsidiary. What is the effect of the above information on noncontrolling interest in net income for the year, reported on the consolidated income statement?

a. Decrease of $1,200

b. Increase of $2,800

c. Increase of $4,000

d. Decrease of $4,000

29. A parent owns 80% of its subsidiarys voting stock. At the end of the year, the subsidiarys ending inventory includes $20,000 in unconfirmed profit on merchandise purchased from the parent. The subsidiarys beginning inventory included unconfirmed profit of $14,000 on merchandise purchased from the parent. The parents ending inventory includes $50,000 in unconfirmed profit on merchandise purchased from the subsidiary. The parents beginning inventory included $30,000 in unconfirmed profit on merchandise purchased from the subsidiary. What is the effect of the above information on equity in net income for the year, reported on the parents books, assuming the parent uses the complete equity method to account for its investment?

a. Decrease of $22,000

b. Decrease of $26,000

c. Decrease of $20,800

d. Increase of $35,200

30. A parent owns 80% of its subsidiarys voting stock. At the end of the year, the parents ending inventory includes $20,000 in unconfirmed profit on merchandise purchased from the subsidiary. The parents beginning inventory included unconfirmed profit of $14,000 on merchandise purchased from the subsidiary. The subsidiarys ending inventory includes $50,000 in unconfirmed profit on merchandise purchased from the parent. The subsidiarys beginning inventory included $30,000 in unconfirmed profit on merchandise purchased from the parent. What is the effect of the above information on noncontrolling interest in net income for the year, reported on the consolidated income statement?

a. Decrease of $1,200

b. Increase of $2,800

c. Increase of $4,000

d. Decrease of $4,000