On January 1, 2018, Race Corp. acquired 80% of the voting common stock of Gallow Inc. During the year, Race sold to Gallow for $450,000 goods that cost $330,000. At year-end, Gallow owned 15% of the goods transferred. Gallow reported a net income of $204,000, and Race's net income was $806,000. Race decided to use the equity method to account for this investment.

Assuming there are no excess amortizations associated with the consolidation and no other intra-entity asset transfers, what was the net income attributable to the noncontrolling interest?

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8 March, 12:27

On January 1, 2018, Race Corp. acquired 80% of the voting common stock of Gallow Inc. During the year, Race sold to Gallow for $450,000 goods that cost $330,000. At year-end, Gallow owned 15% of the goods transferred. Gallow reported a net income of $204,000, and Race's net income was $806,000. Race decided to use the equity method to account for this investment.

Assuming there are no excess amortizations associated with the consolidation and no other intra-entity asset transfers, what was the net income attributable to the noncontrolling interest?

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Bryan Brewer · Answer 1

Net income attributable to the noncontrolling interest is $40800

Explanation:

As far as non-controlling interest is concerned, Race Corp. and the non-controlling interest split the net income of Gallow Inc. proportionate to their ownership interests.

Net income attributable to the noncontrolling interest

($204,000 x 20%) = $40800