1. A parent has a 90% interest in its subsidiary. The subsidiary sold land at a gain to the parent in the current year. The parent still holds the land. How does this transaction affect equity in net income and noncontrolling interest in net income for the current year, assuming the parent uses the complete equity method to report its investment on its own books? A. No effect B. Only affects equity in net income C. Only affects noncontrolling interest in net income D. Affects equity in net income and noncontrolling interest in net income.

Question

Selina

Business

3 June, 18:18

1. A parent has a 90% interest in its subsidiary. The subsidiary sold land at a gain to the parent in the current year. The parent still holds the land. How does this transaction affect equity in net income and noncontrolling interest in net income for the current year, assuming the parent uses the complete equity method to report its investment on its own books? A. No effect B. Only affects equity in net income C. Only affects noncontrolling interest in net income D. Affects equity in net income and noncontrolling interest in net income.

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Answers (2)

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Isla Clark · Answer 1

Answer:D

Explanation:Affects equity in net income and non controlling interest in net income

Kiley Boone · Answer 2

Answer:D. Affects equity in net income and noncontrolling interest in net income.

Explanation:The parent company is the main Company that owns another company or through which another company known as the subsidiary is formed.

If a parent company owns 90% interest in a subsidiary, it means that the parent company will receive 90% of what ever profits or losses incurred by the subsidiary.

Assuming the parent company uses the complete equity method to report its investment on its own books it will affect equity in net income and noncontrolling interest in net income.