What is the effect on consolidated net income


Smith's beginning and ending inventories contain unconfirmed profits on goods purchased from Pearson of $75,000 and $90,000, respectively. Pearson's beginning and ending inventories contain unconfirmed profits on goods purchased from Smith of $120,000 and $100,000, respectively. Smith owns 80% of Pearson. What is the effect on consolidated net income and the noncontrolling interest in net income?

Consolidated net income increases $5,000; noncontrolling interest in net income decreases $15,000.

Consolidated net income decreases $5,000; noncontrolling interest in net income increases $15,000.

Consolidated net income decreases $8,000; noncontrolling interest in net income increases $3,000.

Consolidated net income increases $5,000; noncontrolling interest in net income decreases $3,000.

None of the above.

Request for Solution File

Ask an Expert for Answer!!
Accounting Basics: What is the effect on consolidated net income
Reference No:- TGS058144

Expected delivery within 24 Hours