Advanced Accounting 11th Edition by Paul Fischer,William Tayler, Rita Cheng

تمرين 10

Company S has the following stockholders' equity on January 1, 2015:
Common stock ($1 par, 100,000 shares).................................... $100,000
6% preferred stock ($100 par, 2,000 shares)................................ 200,000
Paid-in capital in excess of par............................................ 900,000
Retained earnings...................................................... 500,000
The preferred stock is cumulative and has dividends one year in arrears on January 1, 2015.
Company P purchased an 80% interest in the common stock of Company S on January 1, 2015, for $1,400,000. Any excess of cost over book value was attributed to goodwill. Company S earned $80,000 during 2015 and paid no dividends. Company P had internally generated net income of $120,000.
What is consolidated net income for 2015, and how is it distributed to the controlling and noncontrolling interests?
How would the answer differ if Company P also purchases one-half of the preferred stock of Company S for $120,000?