On January 1, 2016, Uncle Company purchased 80 percent of Nephew Company's capital stock for $576,000 in cash and other assets. Nephew had a book value of $678,000 and the 20 percent noncontrolling interest fair value was $144,000 on that date. On January 1, 2015, Nephew had acquired 30 percent of Uncle for $288,250. Uncle's appropriately adjusted book value as of that date was $927,500.

Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $20,000 in dividends to shareholders each year and Nephew distributes $5,000 annually. Any excess fair-value allocations are amortized over a 10-year period.