ABC, a holder of a $400,000 XYZ Inc. bond, collected the interest due on June 30, 20X8, and then sold the bond to DEF Inc. for $365,000. On that date the bond issuer, XYZ, a 90 percent owner of DEF, had a $450,000 carrying amount for this bond.
Based on the information given above, what was the effect of DEF's purchase of XYZ's bond on the noncontrolling interest amount reported in XYZ's June 30, 20X8, consolidated balance sheet?
A) No effect
B) $35,000 increase
C) $8,500 decrease
D) $8,500 increase

Question

Quizplus · Accepted Answer

The purchase of the bond by DEF from ABC does not affect the noncontrolling interest in XYZ's consolidated balance sheet because the transaction is between the parent company (XYZ) and its subsidiary (DEF), and does not involve the noncontrolling interest directly.

ABC, a Holder of a $400,000 XYZ Inc