Consolidation policy and principal consolidation concepts. CAR Corporation manufactures computers in the United States. It owns 75 percent of the voting stock of Charles Electronics, 80 percent of the voting stock of Alexandre du France Software Systems (in France), and 90 percent of the voting stock of R Credit Corporation (a finance company). CAR Corporation prepares consolidated financial statements consolidating Charles Electronics, uses the equity method for R Credit Corporation, and treats its investment in Alexandre du France Software Systems as securities available for sale. Data from the annual reports of these companies appear below.

a. Which, if any, of the companies does CAR incorrectly account for according to GAAP?
Assuming the accounting methods and accounting itself for the three subsidiaries shown above are correct, answer the following questions:

b. How much of the net income reported by CAR Corporation Consolidated results from the operations of the three subsidiaries?

c. What is the amount of the minority interest now shown on the income statement, and how does it affect net income of CAR Corporation Consolidated?

d. If CAR had consolidated all three subsidiaries, what would have been the net income of CAR Corporation Consolidated?

e. If CAR had consolidated all three subsidiaries, what minority interest would appear on the income statement?

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CAR Corporation Consolidated Charles Electronics Alexandre du France Software Systems" R Credit Corporation "Market value of shares exceeds cost. Percentage Owned Net Income Dividends Accounting Method $1,200,000 75% 120,000 $ 84,000 48,000 Consolidated 88 80 96,000 60,000 Market Value 90 144,000 120,000 Equity