Peter Corporation Owns a 70% Interest in Sundown Corporation Acquired

question 39

Essay

Peter Corporation owns a 70% interest in Sundown Corporation acquired several years ago at a price equal to book value and fair value.On December 31,2010,Sundown had $300,000 par of 6% bonds outstanding with an unamortized premium of $30,000.The bonds mature in five years and pay interest on January 1 and July 1.On January 2,2011,Peter acquired one-third of Sundown's bonds for $117,000.Peter and Sundown use straight-line amortization.Sundown reports net income of $250,000 for 2011.Peter uses the equity method to account for the investment.
Required:
1.Calculate Peter's income from Sundown for 2011.
2.Calculate the noncontrolling interest share for 2011.

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