3.4

Please, provide step by step solution.

E3-4 Correction of consolidated net income Pop Corporation paid $3,600,000 for a 90 percent interest in Son Corporation on January 1, 2016; Son's total book value was $3,600,000. The excess was allocated as follows: $120,000 to undervalued equipment with a three-year remaining useful life and $280,000 to goodwill. The income statements of Pop and Son for 2016 are summarized as follows (in thousands): Pop Son Sales $8,000 $3.200 Income from Son 360 Cost of sales (4,000) (1.600) Depreciation expense (800) (480) Other expenses (1.600) (720) Net income $ 1,960 $ 400 REQUIRED 1. Calculate the goodwill that should appear in the consolidated balance sheet of Pop and Subsidiary at December 31, 2016. 2. Calculate consolidated net income for 2016