On January 1, 2012, Uncle company purchased 80 percent of nephew Company's capital stock for $548,000 in cash and other assets. Nephew had a book value of $635,000 and the 20 percent noncontrolling interest fair value was $137,000 on that date On January 1, 2011, Nephew had acquired 30 percent of Uncle for $341,500. Uncle's apprppriately adjusted book value as of that date was $1,105,000.

Separate operating income figures (not including investment income) for these two companies follow. In addition, Uncle declares and pays $30,000 in dividends to shareholders each year and Nephew distributes $4,000 annually. Any excess fair-value allocations are amortized oner a 10 year period.

                                           Uncle Company                                              Nephew Company

Year

2012                                     $166,000                                                             $ 34,200       

2013                                       178,000                                                                52,000

2014                                        192,000                                                               61,600

a. Assume that Uncle applies the equity method to account for this investment in Nephew. What is the subsidiary's income recognized by Uncle in 2014?

Subsidiary income recognized

b. What is the noncontrolling interest's share of 2014 consolidated net income?

Noncontrolling interest's share of income.