On January 1, 2016, Leo Company purchased 80 percent of Natalie Company’s capital stock for $584,000 in cash and

other assets. Natalie had a book value of $700,000 and the 20 percent noncontrolling interest fair value was $146,000 on that date. On January 1, 2015, Natalie had acquired 30 percent of Leo for $354,250. Leo’s appropriately adjusted book value as of that date was $1,147,500.

Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $25,000 in dividends to shareholders each year and Natalie distributes $6,000 annually. Any excess fair-value allocations are amortized over a 10-year period.

Leo Natalie

Year Comapny Company

2016 $164,000  $35,200 

2017  $186,000   $56,000 

2018  $216,000   $64,400 

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