Detailed Answer
(b) Because Planet owns 70% interest in Star, the
noncontrolling interest in star is 30%. Therefore, the noncontrolling
interest’s share in Star’s net income of $80,000 is 30% ×
$80,000 = $24,000. Planet’s sale of merchandise to Star for
$10,000 will be eliminated on the consolidated worksheet, and
Planet’s income will be reduced by the intercompany profit of
$2,000. This will not affect the noncontrolling interest’s share of
income because it was a downstream sale from the parent to the
subsidiary and is eliminated by the parent.