the income statements for the year ended 31/12/2011 of Paul and Shune are summarized below

( Paual owns 80% of Shune shares and the cost = BV )

Paul Shune

Sales $600,000 $200,000

Income from shune 120,000

Expenses (250,000) ( 80,000)

Net Income $470,000 $150,000

The consolidated net income would equal