E 9-5 Prepare income allocation schedule Pal Corporation owns 80 percent each of the voting common stock of Sal and Tea Corporations. Sal owns 60 percent of the voting common stock of Won Corporation and 10 percent of the voting stock of Tea. Tea owns 70 percent of the voting stock of Val and 10 percent of the voting stock of Won.

The affiliates had separate incomes during 2016 as follows:

Pal Corporation $50,000 Sal Corporation $30,000 Tea Corporation $35,000 Won Corporation ($20,000) loss Val Corporation $40,000 The only intercompany profits included in the separate incomes of the affiliates consisted of $5,000 on merchandise that Pal acquired from Tea, and it remained in Pal’s December 31, 2016, inventory.

REQuIRED: Compute controlling and noncontrolling interest shares of consolidated net income.

Indirect and Mutual Holdings 325