Pan Corporation purchased 80 percent of the outstanding voting common stock of Sal Corporation on January 2, 2011, for $1,200,000 cash. Sal's balance sheets on this date and on December 31, 2011, are as follows:
SAL CORPORATION BALANCE SHEETS
January 2 December 31
Inventory ........................ $ 200,000 .................. $ 80,000
Other current assets .............. 200,000 ................... 320,000
Plant assets-net ................. 800,000 ................... 880,000
Total assets .................... $1,200,000 ............... $1,280,000
Liabilities ....................... $ 200,000 ................. $ 240,000
Capital stock ..................... 600,000 ................... 600,000
Retained earnings ............... 400,000 .................... 440,000
Total equities ................ $1,200,000 ................ $1,280,000
ADDITIONAL INFORMATION
1. Pan uses the equity method of accounting for its investment in Sal.
2. Sal's 2011 net income and dividends were $280,000 and $240,000, respectively.
3. Sal's inventory, which was sold in 2011, was undervalued by $50,000 at January 2, 2011.
REQUIRED
1. What is Pan's income from Sal for 2011?
2. What is the noncontrolling interest share for 2011?
3. What is the total noncontrolling interest at December 31, 2011?
4. What will be the balance of Pan's Investment in Sal account at December 31, 2011, if investment income from Sal is $200,000? Ignore your answer to 1.
5. What is consolidated net income for Pan Corporation and Subsidiary if Pan's net income for 2011 is $720,800? (Assume investment income from subsidiary is $200,000, and it is included in the $720,800.)