Question 1

Blue Corporation holds 70 percent of Black Company's voting common stock. On January 1, 20X3, Black paid $500,000 to acquire a building with a 10-year expected economic life. Black uses straight-line depreciation for all depreciable assets. On December 31, 20X8, Blue purchased the building from Black for $220,000. Blue reported income, excluding investment income from Black, of $140,000 and $162,000 for 20X8 and 20X9, respectively. Black reported net income of $30,000 and $45,000 for 20X8 and 20X9, respectively. Based on the preceding information, the amount to be reported as NCI in NI for 20X8 will be:

Group of answer choices

10,000

3,750

30,000

7,500

2,500

Question 2.

Tessa Company, the parent, owned 90% of Ochoa Inc. As of 12/31/2019, Tessa made the following entry related to an inter-inventory transfer with Ochoa:

Investment in Sub $90 NCI in NA $10 Cost of Goods Sold $100

Which of the following best explains this entry?

Group of answer choices

E) Upstream transfer, transfer prior to 2019, still unsold to 3rd party at end of 2019

B) Downstream transfer, transfer prior to 2019, sold to 3rd party in 2019

D) Upstream transfer, transfer prior to 2019, sold to 3rd party in 2019

A) Downstream transfer, transfer in 2019, sold to 3rd party in 2019

C) Downstream transfer, transfer prior to 2019, still unsold to 3rd party at end of 2019