EJERCICIO I INVESTMENT RECORDING METHODS

Valle Alto Corp. is considering investing in Constancia Corp, but is unsure about what level of ownership should be undertaken Valle Alto and Constancia have the following reported incomes:

	Valle Alto	Constancia
SALES	$640,000	$370,000
COST OF GOODS SOLD	300,000	230,000
GROSS PROFIT	$340,000	$140,000
SELLING AND ADMINISTRATIVE EXPENSES	120,000	75,000
NET INCOME	$220,000	$65,000

Constancia paid $15,000 in cash dividends to its investors.

Prepare a pro-forma Income Statement for Valle Alto Corp. that compares income under 10%, 20% and 70% ownership levels.

Ownership Levels	10%	20%	70%
Sales	$	$	$
Cost of Goods Sold
Gross Profit
Selling & Administrative Expenses
Operating Income
Dividend Income
Investment Income
Net Income
Noncontrolling Interest
Controlling Interest