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Chapter 4: Question 23Q (page 180)

Lebron Co. owns most but not all of the shares of its subsidiary Bryant Inc. Lebron reported net income of \(124,700. The amount to be attributed to the noncontrolling interest in Bryant is \)30,000. Indicate how Lebron will report the noncontrolling interest in its income statement.

Short Answer

Expert verified

The non-controlling interest is deducted from the net earnings of the parent company.

Step by step solution

01

Meaning of Non-Controlling Interest

Non-controlling interest refers to the position where the parent company contains no control over the decisions made by the subsidiaries.

02

Treatment of non-controlling interest

In the parent company's income statement, the non-controlling interest is deducted from the reportednet income.

Income Statement (an extract)

Particulars

Amounts ($)

Net income

124,700

Less: Non-controlling interest

(30,000)

Net earnings available

94,700

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Most popular questions from this chapter

The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online.

Instructions

Refer to P&G’s financial statements and the accompanying notes to answer the following questions.

(a) What type of income statement format does P&G use? Indicate why this format might be used to present income statement information.

(b) What are P&G’s primary revenue sources?

(c) Compute P&G’s gross profit for each of the years 2012–2014. Explain why gross profit decreased in 2014.

(d) Why does P&G make a distinction between operating and nonoperating revenue?

(e) What financial ratios did P&G choose to report in its “Financial Summary” section covering the years 2009–2014?

Starr Co. had sales revenue of \(540,000 in 2017. Other items recorded during the year were:

Cost of goods sold \)330,000

Salaries and wages expense 120,000

Income tax expense 25,000

Increase in value of company reputation 15,000

Other operating expenses 10,000

Unrealized gain on value of patents 20,000

Prepare a single-step income statement for Starr for 2017. Starr has 100,000 shares of stock outstanding.

What are the advantages and disadvantages of the single-step income statement?

Roxanne Carter Corporation reported the following for 2017: net sales \(1,200,000, cost of goods sold \)750,000, selling and administrative expenses \(320,000, and an unrealized holding gain on available-for-sale securities \)18,000.

Instructions

Prepare a statement of comprehensive income, using (a) the one statement format and (b) the two statement format. (Ignore income taxes and earnings per share.)

What is the basis for distinguishing between operating and non-operating items?
See all solutions

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