Company S has the following stockholders’ equity on January 1, 2019: The preferred stock is cumulative and has dividends one year in arrears on January 1, 2019. Company P purchased an 80% interest in...

Company S has the following stockholders’ equity on January 1, 2019:

The preferred stock is cumulative and has dividends one year in arrears on January 1, 2019.

Company P purchased an 80% interest in the common stock of Company S on January 1, 2019, for $1,400,000. Any excess of cost over book value was attributed to goodwill. Company S earned $80,000 during 2019 and paid no dividends. Company P had internally generated net income of $120,000.

What is consolidated net income for 2019, and how is it distributed to the controlling and noncontrolling interests?

How would the answer differ if Company P also purchases one-half of the preferred stock of Company S for $120,000?