Response to the following problem:
Pin Corporation paid $1,800,000 for a 90 percent interest in San Corporation on January 1, 2011; San's total book value was $1,800,000. The excess was allocated as follows: $60,000 to undervalued equipment with a three-year remaining useful life and $140,000 to goodwill. The income statements of Pin and San for 2011 are summarized as follows (in thousands):
Pin San
Sales $4,000 $1,600
Income from San 180
Cost of sales (2,000) (800)
Depreciation expense (400) (240)
Other expenses (800) (360)
Net income $ 980 $ 200
REQUIRED:
1. Calculate the goodwill that should appear in the consolidated balance sheet of Pin and Subsidiary at December 31, 2011.
2. Calculate consolidated net income for 2011.