Question
Company A acquired a 70% interest in Company B several years ago. In 20X1, Company B sold inventory costing $150,000 to Company A for $180,000.
Company A acquired a 70% interest in Company B several years ago.
In 20X1, Company B sold inventory costing $150,000 to Company A for $180,000.
20% of them were unsold until 20X2 (next year). In 20X2, Company B sold inventory costing $120,000 to Company A again for $160,000.
40% of them were unsold. In 20X2, Company A reported COGS of $300,000 while Company B reported $400,000.
Company A 20X2 income: $800,000;
Company B 20X2 income: $400,000.
1. What is the noncontrolling interest in the 20X2 income of the subsidiary, assuming parent uses equity method.
2. What is the controlling interest in the 20X2 in income of the subsidiary if all the above intra-entity transfer are downstream sales and parent uses equity method.
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