The following diagram depicts the investment affiliations among Companies M, N, and O:

The following facts apply to 2013 operations:

All investments are made at a price equal to book value.
1. Prepare the simple equity method adjustments that would be made for the investments owned by Companies M and N during the year 2013.
2. Intercompany inventory transactions affecting 2013 are as follows:

Using the facts given, determine the consolidated income of the consolidated company, the non-controlling interest, and the controlling interest net income. Income distribution schedules may be used for support.

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Owns 90% Owns 20% Owns 40% Internally generated net income Dividends declared and paid $200,000 $90,000 $40,000 5,000 . . . . .. ._ . . . . . . 40,000 10,000 Sold by N Sold by Co to O to M 25% 30% 2013 sales