Reference no: EM132468329

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

Question 1: If Leo uses the equity method for investment, what is the subsidiary's income recognized by Leo in 2018?

Question 2: What is the net income attributable to the noncontrolling interest for 2018?