On January 1,2014,Paul Corporation Acquired a 90% Interest in Satorius

Essay

On January 1,2014,Paul Corporation acquired a 90% interest in Satorius Company for $360,000 when Satorius' stockholders' equity was $400,000; with Common stock of $200,000 and Retained earnings of $200,000.
On January 1,2014,Satorius Company purchased a 10% interest in Paul Company for $90,000 when Paul's total stockholders' equity was $900,000; with Common stock of $500,000 and Retained earnings of $400,000.
The following data was available for the year ending December 31,2014:
$$\begin{array} { l l l } & \text { Peul Company } & \text { Satorius Company } \\\text { Net income } & \$ 150,000 & \$ 130,000 \\\text { Dividends } & 0 & 0\end{array}$$ Use the conventional approach to account for the mutually-held stock.Assume there were no book value/fair value differentials for each investment.The separate net incomes do not include investment income.
Required:
1.Prepare the journal entry for Paul on January 1,2014.
2.Prepare the journal entry for Satorius on January 1,2014.
3.Prepare the journal entry to record the constructive retirement of 10% of Paul's outstanding stock due to Satorius' purchase of Paul's stock.
4.Determine the incomes of Paul and Satorius on a consolidated basis with mutual income for 2014 using simultaneous equations.
5.What is controlling interest share of consolidated net income and noncontrolling interest shares for 2014?
6.What is consolidated net income?