Pot Corporation purchased a 70 percent interest in Sod Corporation on January 2, 2011, for $98,000, when Sod had capital stock of $100,000 and retained earnings of $20,000. On June 30, 2012, Pot purchased an additional 20 percent interest for $37,000. Comparative financial statements for Pot and Sod Corporations at and for the year ended December 31, 2012, are as follows (in thousands):

REQUIRED

1. Prepare a schedule explaining the $171,000 balance in Pot's Investment in Sod account at December 31, 2012.

2. Compute goodwill that will appear in the December 31, 2012, consolidated balance sheet.

3. Prepare a schedule computing consolidated net income for 2012.

4. Compute consolidated retained earnings on December 31, 2012.

5. Compute noncontrolling interest on December 31,2012.

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Pot Sod Combined Income and Retained Earnings Statement for the Year Ended December 31 Sales $400 $200 Income from Sod 24 Cost of sales (250) (50) 124 (150) Expenses Net income (20) 30 Add: Beginning retained earnings Less: Dividends, December 1 Retained earnings, December 31 200 50 (64) $260 (10) $ 70 Balance Sheet at December 31 Other assets $429 $200 Investment in Sod 171 Total assets $600 $200 $ 40 $ 30 Liabilities Common stock 300 260 100 70 Retained earnings Total equities $600 $200