On January 1, 2008, Pond Co. acquired 40% of the outstanding voting common shares of Ramp Co. for $700000. On that date, Ramp reported assets and liabilities with book values of $2.2 million and $700000 respectively. A building owned by Ramp had an appraised value of $300000, although it had a book value of only $120000. This building had a 12 year remaining life and no salvage value. It was being depreciated of the straight line basis.
Ramp generated net income of $300000 in 2008 and a loss of $120000 in 2009. In each of these two years, Ramp paid a cash dividend of $70000 to its stockholders.
During 2008, Ramp sold inventory to Pond that had an original cost of $60000. The merchandise was sold to Pond for $96000. Of this balance, 72000 was resold to outsiders during 2008 and the remainder was sold during 2009. In 2009, Ramp sold inventory to Pond for $180000. This inventory had cost only $108000. Pond resold $120000 of the inventory during 2009 and the rest during 2010.
Required: For 2008 and then for 2009, calculate the equity income to be reported by Pond for external reporting purposes.