3. (50 points) P Company purchased 75% of Prairie Co for $696,000 cash on 1/1/2019. Balance sheets for P Company and S Company immediately prior to the combination were as follows: P Co S Co BV BV FV Current Assets except Inventory $1,114,000 $162,000 $162,000 Inventory 200,000 40,000 20,000 Land 540,000 298,000 436,000 Building and Equipment (net) 1,185,000 100,000 300,000 Total 3,039,000 600,000 918,000 Liabilities $900,000 $150,000 150,000 Common Stock, $20 par value 1,650,000 240,000 Other Contributed Capital 218,000 60,000 Retained Earnings 271,000 150,000 Total $3,039,000 600,000 *P company uses FIFO. ** P company depreciate the Sco's building and equipment using 8 years useful life and zero salvage value. YEAR Net income (Sco) Dividend (Sco) 2020 $30,000 $12,000 2021 $40,000 $15,000 2022 -$40,000 $18,000 YEAR Goodwill 2020 $275,000 2021 $200,000 2022 $130,000 YEAR Net income Dividend Pco (on P's book) 2020 2021 $300,000 $400,000 $100,000 $12,000 2022 $450,000 $15,000 a. Assuming P co uses partial equity method, determine consolidated net income for 2020, 2021 and 2022. 3. (50 points) P Company purchased 75% of Prairie Co for $696,000 cash on 1/1/2019. Balance sheets for P Company and S Company immediately prior to the combination were as follows: P Co S Co BV BV FV Current Assets except Inventory $1,114,000 $162,000 $162,000 Inventory 200,000 40,000 20,000 Land 540,000 298,000 436,000 Building and Equipment (net) 1,185,000 100,000 300,000 Total 3,039,000 600,000 918,000 Liabilities $900,000 $150,000 150,000 Common Stock, $20 par value 1,650,000 240,000 Other Contributed Capital 218,000 60,000 Retained Earnings 271,000 150,000 Total $3,039,000 600,000 *P company uses FIFO. ** P company depreciate the Sco's building and equipment using 8 years useful life and zero salvage value. YEAR Net income (Sco) Dividend (Sco) 2020 $30,000 $12,000 2021 $40,000 $15,000 2022 -$40,000 $18,000 YEAR Goodwill 2020 $275,000 2021 $200,000 2022 $130,000 YEAR Net income Dividend Pco (on P's book) 2020 2021 $300,000 $400,000 $100,000 $12,000 2022 $450,000 $15,000 a. Assuming P co uses partial equity method, determine consolidated net income for 2020, 2021 and 2022