6-4 Controlling Interest, Downstream Sales On January 1, 2011, Pearce Company purchased an 80% interest in the capital stock of Searl Company for $2,460,000. At that time, Searl Company had capital stock of $1,500,000 and retained earnings of $300,000. The difference between book of value Searl equity and the value implied by the purchase price was attributed to specific assets of Searl Company as follows:

375,000 to equipment of Searl Company with a five-year remaining life.

187,500 to land held by Searl Company.

112,500 to inventory of Searl Company. Searl uses the FIFO assumption in pricing its inventory, and

600,000 that could not be assigned to specific assets or liabilities of Searl Company.

$1,275,000 Total

At year-end 2011 and 2012, Searl had in its inventory merchandise that it had purchased from Pearce at a 25% markup on cost during each year in the following amounts:

2011 $ 90,000

2012 $105,000

During 2011, Pearce reported net income from independent operations (including sales to affiliates) of $1,500,000, while Searle reported net income of $600,000. In 2012, Pearces net income from independent operations (including sales to affiliates) was $1,800,000 and Searls was $750,000

Controlling Interest, Upstream Sales

Refer to Exercise 6-4. Using the same figures, assume that the merchandise mentioned was included in Pearces inventory, having been purchased from Searl.

Required:

Calculate the controlling interest in consolidated net income for 2011 and 2012.

could you pls solve as the same as the templates format

2011 2012 1,800,000 Pearce Company's income from its independent operations Pearce Company's income from its independent operations Pearce Company's interest in the realized net income of Sear! Plus: Company: Reported Net income Less: Amortization of difference between implied and book value Pearce Company's interest in the realized net income of Sear! Plus: Company: Reported Net income Less amortization of difference between implied and book value Less profit included therein that has not been realized in transactions with third parties Less: Unrealized profit included therein Plus profit realized in 2012 Income realized in transaction with third parties Pearce Company's interest therein Income realized in transaction with third parties Pearce Company's interest therein Controlling interest in consolidated net income Controlling interest in consolidated net income