Angela, Inc., holds a 90 percent interest in Corby Company. During 2017, Corby sold inventory costing $125,600 to Angela for $157,000. Of this inventory, $42,800 worth was not sold to outsiders until 2018. During 2018, Corby sold inventory costing $141,400 to Angela for $202,000. A total of $58,000 of this inventory was not sold to outsiders until 2019. In 2018, Angela reported separate net income of $220,000 while Corby's net income was $93,000 after excess amortizations. What is the noncontrolling interest in the 2018 income of the subsidiary?
Gross profit = $157,000 - $125,600 = $31,400
Gross profit rate = ($31,400 / $157,000)* 100 = 20%
Unrealized Gross profit = $42,800 * 20% = $8,560
Ending year
Unsold inventory = $58,000
Gross profit = $202,000 - $141,400 = $60,600
Gross profit rate = ($60,600 / $202,000)*100 =30%
Unrealized gross profit =$58,000* 30% = $17,400
Net income attributable to noncontrolling interest
Reported net income for 2018 | $93,000 |
Add: Deferral of unrealized gross profit | $8,560 |
Less: Unrealized GP of current year | ($17,400) |
Adjusted income | $84,160 |
Non- controlling interest @ 10% | $8,416 |
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