Question:

Correction of consolidated net income;

Liong Corporation paid $2,500,000 in cash for an 80 percent interest in Taro Corporation on January 1, 2016, when the book value of Taros net assets was $2,250,000. Some additional information is given below:

a Land was overvalued by $100,000.

b Equipment with a five-year remaining useful life was undervalued by $150,000.

c Taros net income was $300,000.

d Liongs net income was $1,440,000, including an income of $240,000 from Taro.

REQUIRED:

1. Calculate the goodwill that should appear in the consolidated balance sheet of Liong and Subsidiary at December 31, 2016.

2. Calculate consolidated net income for 2016.

Please proper explain and do not copy from chegg. otherwise I have to report the answer.