A Parent Company Regularly Sells Merchandise to Its 80%-Owned Subsidiary

Multiple Choice

A parent company regularly sells merchandise to its 80%-owned subsidiary. Which of the following statements describes the computation of noncontrolling interest income?

A) the subsidiary's net income times 20%.
B) (the subsidiary's net income x 20%) + unrealized profits in the beginning inventory - unrealized profits in the ending inventory.
C) (the subsidiary's net income + unrealized profits in the beginning inventory - unrealized profits in the ending inventory) × 20%.
D) (the subsidiary's net income + unrealized profits in the ending inventory - unrealized profits in the beginning inventory) × 20%.