On January 1,20X7,Server Company purchased a machine with an expected economic life of five years.On January 1,20X9,Server sold the machine to Patron Corporation and recorded the following entry:
Patron Corporation holds 75 percent of Server's voting shares.Server reported net income of $50,000,and Patron reported income from its own operations of $100,000 for 20X9.There is no change in the estimated economic life of the equipment as a result of the intercorporate transfer.
-Based on the preceding information,income assigned to the noncontrolling interest in the 20X9 consolidated income statement will be:
A)$12,000.
B)$14,000.
C)$12,500.
D)$48,000.

Question

On January 1,20X7,Server Company purchased a machine with an expected economic life of five years.On January 1,20X9,Server sold the machine to Patron Corporation and recorded the following entry:
  Patron Corporation holds 75 percent of Server's voting shares.Server reported net income of $50,000,and Patron reported income from its own operations of $100,000 for 20X9.There is no change in the estimated economic life of the equipment as a result of the intercorporate transfer.
-Based on the preceding information,income assigned to the noncontrolling interest in the 20X9 consolidated income statement will be:
A)$12,000. 
B)$14,000. 
C)$12,500. 
D)$48,000.

Quizplus · Accepted Answer

The income assigned to the noncontrolling interest is typically calculated based on the noncontrolling interest's percentage ownership in the subsidiary's net income. The choice of $12,000 likely reflects this calculation.

On January 1,20X7,Server Company Purchased a Machine with an Expected