SCAQ Foundation AFF Practice Questions - SCAQ Foundation Advanced Financial Reporting Examination Exam

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Subsidiary (70% owned by Parent) sold inventory to Parent for $50,000 at a profit margin of 30% on selling price. Half of the inventory remains in Parent's warehouse at year end. How does the unrealized profit elimination impact the non-controlling interest (NCI)?

No impact on NCI because it was a sale to Parent Reduces NCI share of profit by $2,250 Reduces NCI share of profit by $5,250 Reduces NCI share of profit by $7,500

Correct Answer:

Reduces NCI share of profit by $2,250

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