P8-6 Midyear purchase of additional interest, preacquisition income Pop Corporation purchased a 70 percent interest in Son Corporation on January 2, 2016, for $98,000, when Son had capital stock of $100,000 and retained earnings of $20,000. On June 30, 2017, Pop purchased an additional 20 percent interest for $37,000.

Comparative financial statements for Pop and Son Corporations at and for the year ended December 31, 2017, are as follows (in thousands):

Pop Son Combined Income and Retained Earnings Statement for the Year Ended December 31 Sales $400 $200 Income from Son 24 —

Cost of sales (250) (150)

Expenses (50) (20)

Net income 124 30 Add: Beginning retained earnings 200 50 Less: Dividends, December 1 (64) (10)

Retained earnings, December 31 $260 $ 70 Balance Sheet at December 31 Other assets $429 $200 Investment in Son 171 —

Total assets $600 $200 Liabilities $ 40 $30 Common stock 300 100 Retained earnings 260 70 Total equities $600 $200 REQuIRED 1. Prepare a schedule explaining the $171,000 balance in Pop’s Investment in Son account at December 31, 2017.

2. Compute goodwill that will appear in the December 31, 2017, consolidated balance sheet.

3. Prepare a schedule computing consolidated net income for 2017.

4. Compute consolidated retained earnings on December 31, 2017.

5. Compute noncontrolling interest on December 31, 2017.