Use the following information to answer the question(s)below.
Pew Corporation acquired 80% ownership of Sordid Incorporated,at a time when Pew's investment cost was equal to 80% of Sordid's book value.At the time of acquisition,the book values and fair values of Sordid's assets and liabilities were equal.Pew uses the equity method.During 2011,Pew sold goods to Sordid for $160,000 making a gross profit percentage of 20%.Half of these goods remained unsold in Sordid's inventory at the end of the year.Income statement information for Pew and Sordid for 2011 were as follows:

-The 2011 consolidated income statement showed noncontrolling interest share of
A)$3,200.
B)$6,400.
C)$8,800.
D)$12,000.

Question

Use the following information to answer the question(s)below.
Pew Corporation acquired 80% ownership of Sordid Incorporated,at a time when Pew's investment cost was equal to 80% of Sordid's book value.At the time of acquisition,the book values and fair values of Sordid's assets and liabilities were equal.Pew uses the equity method.During 2011,Pew sold goods to Sordid for $160,000 making a gross profit percentage of 20%.Half of these goods remained unsold in Sordid's inventory at the end of the year.Income statement information for Pew and Sordid for 2011 were as follows:
 
-The 2011 consolidated income statement showed noncontrolling interest share of
A)$3,200. 
B)$6,400. 
C)$8,800. 
D)$12,000.

Quizplus · Accepted Answer

D)Downstream sale has no effect on noncontrolling interest share;$60,000 × .2 = $12,000

Use the Following Information to Answer the Question(s)below