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  3. pollard corporation owns 90% of the outstanding co

Pollard Corporation owns 90% of the outstanding common stock of Steele Company. On January 1,...

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Accounting

Pollard Corporation owns 90% of the outstanding common stock of Steele Company. On January 1, 2008, Steele Company issued $500,000, 12%, ten-year bonds.

On January 1, 2010, Pollard Corporation paid $412,000 for Steele Company bonds with a par value of $400,000 and a carrying value of $393,600. Both companies use the straight-line method to amortize bond premiums and discounts. Pollard Corporation accounts for the investment using the cost method of accounting.

Compute the noncontrolling interest in the 2010 consolidated income assuming that Pollard Corporation reported a net income of $300,000 (includes dividend income from Steele Company). Steele Company reported net income of $180,000 and declared and paid cash dividends of $100,000. (Show Work)

a. $18,000

b. $17,440 (is the answer but how?)

c. $17,360

d. $18,560

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