Parent owns 75% of the outstanding stock of Sub. Sub reports income of $300,000 and pays dividends of $100,000 in 2014, the first full year they have been combined. The only adjustment needed to the income of Sub is additional depreciation expense of $10,000. What effect will this year have on the non-controlling interest of Parent? Ignore any income tax effects.
Answered Essay: Parent owns 75% of the outstanding stock of Sub. Sub reports income of $300,000 and pays dividends
Expert Answer
Ans:
Subsidiary Income – 300000
less: Dividend (100000)
additional depreciation expense (10000)
Consolidated Income 190000
Share of non-controlling interest = 190000 x 25% = $ 47500
