b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers below. Consolidated Income Statement Sales Answer Cost of goods sold Answer Gross profit Answer Operating expenses Answer Answer Answer Answer Answer Answer Answer
Preparing a consolidated income statement—Cost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits
A parent company purchased a 60% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $140,000 in excess of the subsidiary’s
| Parent | Subsidiary | |
|---|---|---|
| Income statement: | ||
| Sales | $5,000,000 | $500,000 |
| Cost of goods sold | (3,400,000) | (300,000) |
| Gross profit | 1,600,000 | 200,000 |
| Income (loss) from subsidiary | 27,000 | - |
| Operating expenses | (900,000) | (135,000) |
| Net income | $727,000 | $65,000 |
a. Starting with the parent’s current-year pre-consolidation net income of $727,000, compute the amount of current-year net income attributable to the parent that will be reported in the consolidated financial statements.
Do not use negative signs with your answers below.
| Reconciliation of Cost to Equity Method | |
|---|---|
| Parent's pre-consolidation net income | Answer |
| Dividend Income | Answer |
| P% x Net income of subsidiary | Answer |
| P% x AAP amortization | Answer |
| P% of Upstream profit | Answer |
| Downstream profit | Answer |
| Net income attributable to controlling interest | Answer |
b. Prepare the consolidated income statement for the current year.
Do not use negative signs with your answers below.
| Consolidated Income Statement | |
|---|---|
| Sales | Answer |
| Cost of goods sold | Answer |
| Gross profit | Answer |
| Operating expenses | Answer |
| Answer | Answer |
| Answer | Answer |
| Answer | Answer |
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