P Company owns 104,000 of the 130,000 shares outstanding of S Corporation. S Corporation sold equipment to P Company on January 1, 2011 for $740,000. The equipment was originally purchased by S Corporation on January 1, 2010 for $1,280,000 and at that time its estimated depreciable life was 8 years. The equipment is estimated to have a remaining useful life of four years on January 1, 2011. Both companies use the straight-line method to depreciate equipment. In 2012 P Company reported net income from its independent operations of $3,270,000, and S Corporation reported net income of $820,000 and declared dividends of $60,000. P Company uses the cost method to record the investment in S Company.

Required:

• Prepare, in general journal form, the work paper entries relating to the intercompany sale of equipment that are necessary in the December 31, 2012 consolidated financial statements work papers.
• Calculate the amount of non-controlling interest to be deducted from consolidated net income in the consolidated income statement for 2012.
• Calculate controlling interest in consolidated net income for 2012.