Correction of consolidated net income
Pin Corporation paid $1,800,000 for a 90 percent interest in San Corporation on January 1, 2011; San’s total book value was $1,800,000. The excess was allocated as follows: $60,000 to undervalued equipment with a three year remaining useful life and $140,000 to goodwill. The income statements of Pin and San for 2011 are summarized as follows (in thousands):
|
Pin |
San |
|
|
Sales |
$4,000 |
$1,600 |
|
Income from San |
180 |
|
|
Cost of sales |
(2,000) |
(800) |
|
Depreciation expense |
(400) |
(240) |
|
Other expenses |
(800) |
(360) |
|
Net income |
$ 980 |
$ 200 |
REQUIRED
1. Calculate the goodwill that should appear in the consolidated balance sheet of Pin and Subsidiary at December 31, 2011.
2. Calculate consolidated net income for 2011.