The following are the balance sheets and income statements of P Co. and S Inc. for the year ended 12/31/20x1. At the beginning of the year, P purchased 70% of the outstanding stock of S Inc. During the year S Inc. borrowed $15 from P Co., which remains outstanding at the end of the year. There were no other intercompany transactions and the only item affecting S Inc.’s stockholders’ equity during the year was S Inc.’s earnings. Assume that the book value of S Inc.’s net assets on the acquisition date equaled their fair market value. The income tax rate is 30% for both companies. Show the consolidated amounts in the column provided.

	P	S	Consolidated
Current assets	$ 33.9	$ 40.0
Receivable from S	15.0
Investment in S	86.1
P,P&E - net	325.0	150.0
Intangibles	10.0	25.0
Goodwill
Total assets	$ 470.0	$ 215.0
Current liabilities	$ 20.0	$ 30.0
Payable to P		15.0
Long-term debt	200.0	120.0
Total liabilities	$ 220.0	$ 165.0
Stockholders’ equity
Noncontrolling interest
Paid-in capital	160.0	65.0
Retained earnings	90.0	(15.0)
Total equity	$ 250.0	$ 50.0
Total liabilities & equity	$ 470.0	$ 215.0
Sales	$ 100.0	$ 150.0
Cost of goods sold	45.0	120.0
Gross profit	55.0	30.0
Operating expenses	35.0	55.0
Pretax profit	20.0	(25.0)
Income tax expense (benefit)	6.0	(8.0)
Income before equity earnings of S	14.0	(17.0)
Equity in earnings of S	(11.9)
Consolidated net income	2.1
Noncontrolling interest in earnings
Controlling interest in earnings

a. Complete the consolidated balance sheet and income statement amounts for the year ended 12/31/20x1.

b. Recall from your finance coursework that the various sources of capital have different capital costs whereas the overall weighted average cost of capital for the consolidated entity is theoretically unaffected by the mix of debt and equity (tax issues aside). From the standpoint of an analyst trying to value the common shares of the parent, how do you think minority interest should be treated for analytical purposes, debt or equity?