Question

In: Accounting

Akron, Inc. owns 80%  of the capital stock of Benson Company and 60%  of the capital stock of...

Akron, Inc. owns 80%  of the capital stock of Benson Company and 60%  of the capital stock of Cashin, Inc. Benson Company owns 35%  of the capital stock of Cashin, Inc. Cashin, Inc., in turn, owns 25% of the capital stock of Akron, Inc.

Net income before adjusting for interests in intercompany net income for each corporation follows:

Akron, Inc.

A(0) = 180,000

Benson Co.

B(0) = 130,000

Cashin, Inc.

C(0) = 320,000

Ignore all income tax considerations.

A(e) = Akron's consolidated net income; that is, its net income plus its share of the consolidated net income of Benson and Cashin

B(e) = Benson's consolidated net income; that is, its net income plus its share of the consolidated net income of Cashin

C(e) = Cashin's consolidated net income; that is, its net income plus its share of the consolidated net income of Akron

Suppose a parent company (or parent companies) owns less than 100%  but more than 50%  of a subsidiary company. Then, the part of the consolidated net income that doesn't belong to the parent companies is called the subsidiary's company minority interest.

Benson's minority interest in consolidated net income is:

A) 61,090

B) 45,500

C) 109,907

D) 26,000

Solutions

Expert Solution

Minority Interest Calculation of Benson Company :-
Solution :-
Name of the Company % Share Subsidary Company
Akron Inc 80% Benson Company
Akron Inc 60% Cashin Inc
Benson Company 35% Cashin Inc
Cashin Inc 25% Asron Inc
Minority Interest Defination :-
Minority Interest is the Ownership of the Subsidary Companies
Not by the Holding Company (i.e., Lessthan 50% of Shares)
Hence, in the above table Minorirty Interest will be calculated
for the Benson Company & Cashin Inc only, because of lessthan
50% of shares
Benson Company Net Income is Rs.1,30,000/-
Akron Inc having 80 % of Share of Benson Company, it means
Rs.1,30,000/- @ 80 % = Rs.1,04,000/-
Hence Rs.1,30,000/- Less Rs.1,04,000/- = Rs.26,000/-
Benson Company Minority Interest in the consolidate income
is Rs.26,000/-
Answer (D)

ekkarill92 answered 2 years ago
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