On January 1, Year 2, PAT Ltd. acquired 90% of SAT Inc. when SAT's retained earnings were $1,000,000. There was no acquisition differential. PAT accounts for its investment under the cost method. SAT sells inventory to PAT on a regular basis at a markup of 30% of selling price. The intercompany sales were $160,000 in Year 2 and $190,000 in Year 3. The total amount owing by PAT related to these intercompany sales was $60,000 at the end of Year 2 and $50,000 at the end of Year 3. On January 1, Year 3, the inventory of PAT contained goods purchased from SAT amounting to $70,000, while the December 31, Year 3, inventory contained goods purchased from SAT amounting to $80,000. Both companies pay income tax at the rate of 40%.

Selected account balances from the records of PAT and SAT for the year ended December 31, Year 3, were as follows:

(a) Determine the amount to report on the Year 3 consolidated financial statements for the selected accounts noted above.

(b) Indicate how non-controlling interest on the Year 3 consolidated income statement and Year 3 consolidated balance sheet will be affected by the intercompany transactions noted above.

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PAT SAT $ 510,000 $ 400,000 Inventory Accounts payable Retained earnings, beginning of year Sales Cost of sales Income tax expense 700,000 420,000 1,200,000 2,500,000 4,100,000 2,600,000 3,200,000 1,800,000 180,000 150,000