question archive A parent and its 80 percent owned subsidiary have made several intercompany sales of noncurrent assets during the past two years
A parent and its 80 percent owned subsidiary have made several intercompany sales of noncurrent assets during the past two years
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A parent and its 80 percent owned subsidiary have made several intercompany sales of noncurrent assets during the past two years. The amount of income assigned to the noncontrolling interest for the second year should include the noncontrolling interest's share of gains:
A. unrealized in the second year from upstream sales made in the second year.
B. realized in the second year from downstream sales made in both years.
C. realized in the second year from upstream sales made in both years.
D. both realized and unrealized from upstream sales made in the second year.
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Answer:
A parent and its 80 percent owned subsidiary have made several intercompany sales of non current assets during the past two years. The amount of income assigned to the non controlling interest for the second year should include the non controlling interest's share of gains realised in the second year from upstream sales made in both years.
In the second year, income declared as non conrolling interest include the share of all the profits and gains which is derived mainly in the second year from the sales made in both of the past years.
Hence the correct option is Option C - realized in the second year from upstream sales made in both years.
