Advanced Accounting 10th Edition by Thomas Schaefer, Joe Ben Hoyle, Timothy Doupnik

Exercise 10

In computing the noncontrolling interest's share of consolidated net income, how should the subsidiary's net income be adjusted for intra-entity transfers
a. The subsidiary's reported net income is adjusted for the impact of upstream transfers prior to computing the noncontrolling interest's allocation.
b. The subsidiary's reported income is adjusted for the impact of all transfers prior to computing the noncontrolling interest's allocation.
c. The subsidiary's reported income is not adjusted for the impact of transfers prior to computing the nohcontrolling interest's allocation.
d. The subsidiary's reported income is adjusted for the impact of downstream transfers prior to computing the noncontrolling interest's allocation.