P Co acquired 80% interest in Y Co on 1 January 20x1. Income Statement for the year ended 31 December 20x3 P Co Y Co Operating profit $3,000,000 $980,000 Dividend income from Y 400,000 Interest income Y and bank 120,000 Interest expense to P (100,000) Profit before tax $3,520,000 $880,000 Tax @20% (704,000) (176,000) Profit after tax $2,816,000 $704,000 Dividends declared 800,000) (500,000) Profit retained $2,01 6,000 $204,000 Retained earnings, 1 January 4,450,000 690,000 Retained earnings, 31 December $5:465:000 $894,000