On January 1, Year 1, Parent Co. acquired 80% of Sub Co. for $800,000. The fair value of the noncontrolling interest was $200,000. Sub Co.'s net assets had a book value of $700,000 and a fair value of $900,000. The difference was attributable to equipment with a 10-year remaining life. <br/><br/>In Year 1, Sub Co. reported net income of $100,000 and paid dividends of $20,000. Parent Co. reported separate net income of $500,000 (excluding investment income). <br/><br/>What is the Consolidated Net Income attributable to Parent Co. for Year 1?

1. **Analyze Excess Fair Value:**<br/> FV of Net Assets ($900,000) - BV of Net Assets ($700,000) = $200,000 excess.<br/> Attributed to Equipment (10 year life).<br/> Annual Amortization = $200,000 / 10 = $20,000.<br/><br/>2. **Adjust Sub Co. Net Income:**<br/> Reported NI: $100,000<br/> Less: Amortization of excess FV: ($20,000)<br/> Adjusted Sub NI: $80,000<br/><br/>3. **Calculate Consolidated NI:**<br/> Parent Separate NI: $500,000<br/> + Sub Adjusted NI: $80,000<br/> Total Consolidated NI: $580,000<br/><br/>4. **Attributable to Parent:**<br/> Parent Share = 80% of Adjusted Sub NI = 0.80 * 80,000 = $64,000.<br/> Total Parent NI = $500,000 + $64,000 = $564,000.<br/><br/> *Check via NCI subtraction:*<br/> Total Consolidated NI ($580,000) - NCI Share (20% of $80,000 = $16,000) = $564,000.