What effect will the adjustment for the realization of the intercompany gain (in the preparation of the consolidated income statement) have on the non-controlling interest in income for 2017?
On June 30, 2015, Parent Company sold some land to its subsidiary for $240,000. The land had cost Parent Company $120,000 when it was acquired three years previously. The transaction was subject to income tax at a rate of 20%. On June 30, 2017, the subsidiary sold the land to an outside party for $275,000. This transaction was also subject to income tax at a 20% rate. Parent Company owns 75% of the outstanding shares of its subsidiary and accounts for its investment using the cost method.
A) It will have no effect on the non-controlling interest in income.
B) It will increase the non-controlling interest in income by $30,000.
C) It will decrease the non-controlling interest in income by $24,000.
D) It will increase the non-controlling interest in income by $24,000.
A) It will have no effect on the non-controlling interest in income.
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