Carroll Company sells all its output at 25 percent above cost. Pacific Corporation purchases all its inventory from Carroll. Selected information on the operations of the companies over the past three years is as follows: Pacific acquired 60 percent of the ownership of Carroll on January 1, 20X1, at underlying book value. Compute consolidated net income and income assigned to the controlling interest for 20X2, 20X3, and 20X4. Carroll Company sells all its output at 25 percent above cost. Pacific Corporation purchases all its inventory from Carroll. Selected information on the operations of the companies over the past three years is as follows: Solution Cosolidated Income 20x2 20x3 20x4 Operating Income(Pacific) 160000 249000 315000 Operating Income(Carroll) 109000 99000 169000 Total 269000 348000 484000 Unrealised profit on ending/op. Inv. 70700-(70700/125*100) -14140 14140 106200- (106200/125*100) -21240 21240 139200-(139200/125*100) -27840 Cosolidated net Income 254860 340900 477400 Cosolidated net Income 254860 340900 477400 Less: Income assigned to non-cont.int. (109000-14140)*40% 37944 (99000+14140- 21240)*40% 36760 (169000+21240-27840)*40% 64960 Income assigned to Cont.int. 216916 304140 412440.

1. Castigliano's Method:
Solution
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