Calculating Consolidated Net Income Potter Inc. owns 90% of Stane Inc.’s outstanding common stock and 80% of Steele Inc.’s outstanding common stock. The 2006 net income from each com¬

pany’s own separate operations, exclusive of earnings recorded under the equity method and amor¬ tization of cost over book value of net assets, follows:

Potter . $1,000,000 Stane . 300,000 Steele . 100,000 Amortization of cost over book value of net assets on a full-year basis is $27,000 and $8,000 for Stane and Steele, respectively.

Required 1. Calculate

(a) the noncontrolling interest in each subsidiary’s net income and

(b) the controlling interest in the consolidated net income for 2006, assuming that the subsidiaries were owned during the entire year.

2. Calculate

(a) the noncontrolling interest in each subsidiary’s net income and

(b) the controlling interest in the consolidated net income for 2006, assuming that Stane was acquired on 5/1/06 and Steele was acquired on 7/1/06. (Assume that earnings occurred evenly throughout the year.)