On December 31, 2014, Pate Corporation acquired 80% of Starmont Corporation€™s common stock for $900,000 cash. Assume that the fair values of Starmont€™s identifiable assets and liabilities equaled book values on the acquisition date. Following are the December 31, 2014, separate balance sheets of Pate and Starmont immediately following the acquisition:

The following are Pate€™s and Starmont€™s results of operations during 2015:

Additional Information:
€¢ Included in these totals are intra-entity sales from Pate to Starmont totaling $100,000. Pate applies the same markup on sales to Starmont as to its other customers. Starmont sold all of this inventory to outside customers during 2015 for $150,000.
€¢ There was no goodwill impairment during 2015.
€¢ The applicable income tax rate is 35%.

Required:
1. Prepare the December 31, 2014, consolidated balance sheet under the acquisition method.
2. Prepare the consolidated income statement for the year ended December 31, 2015. Show the deduction for net income allocated to noncontrolling interest to arrive at net income€”attributable to Pateshareholders.

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Pate Starmont Assets 400,000 1,000,000 900,000 $2,300,000 Current assets Long-term assets Investment in Starmont 300,000 860,000 Total assets 1,160,000 Liabilities 300,000 900,000 1,200,000 100,000 170,000 270,000 Current liabilities Long-term liabilities Total liabilities Stockholders' Equity Common stock 500,000 600,000 1,100,000 $2,300,000 300,000 590,000 890,000 $1,160,000 Retained earnings Total stockholders' equity Total liabilities and equity Pate Starmont $1,500,000 Sales revenue Cost of goods sold SG&A expenses 900,000 200,000 $1,000,000 650,000 130,000