Problem:
ABC Company acquired a 80% interest in the DEF Company in year 1. For the year ended December 31, year 2, ABC reported net income of $100,000. During year 2, ABC sold merchandise to DEF for $10,000 at a profit of $3,000. The merchandise remained in DEF' s inventory at the end of year 2.
Required:
Question: For consolidation purposes what is the noncontrolling interest's share of DEF's net income for year 2?
a. $ 20,000
b. $23,400
c. $24,000
d. $26,000
Note: Be sure to show how you arrived at your answer.