Question

A parent sells land to its 80%-owned subsidiary at a gain of $100,000. The following year, the subsidiary sells the land to an outside entity for a gain of $10,000. How is the noncontrolling interest in net income affected in the year the parent sells the land?

a. Increase of $20,000

b. Decrease of $22,000

c. Decrease of $2,000

d. No effect

Answer 1

b. Decrease of $22,000