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

Exercise 3

Company P purchases an 80% interest in Company S on January 1, 2011, for $480,000. Company S had equity of $450,000 on that date. Any excess of cost over book value was attributed to equipment with a 10-year life. On July 1, 2016, Company P purchased another 10% interest for $160,000. Company S's equity was $550,000 on January 1, 2016, and it earned $50,000 evenly during 2016. Company P had internally generated net income of $120,000 during 2016. Calculate consolidated income for 2016 and the distribution of consolidated income to the noncontrolling and controlling interests.