A parent purchased a 70% controlling interest in its sub several years ago. The aggregate fair value of the controllingand NCI was $350,000 in excess of the sub's SHE on acquisition date. The excess was assigned to a building that wasestimated to be undervalued by $200,000 and to an unrecorded patent valued at $150,000. The building is depreciatedover a 16-year period and patent is amortized over an 8-year period. During the current year, the parent and subreported a total of $600,000 of I/C sales. The BOY there were $40,000 of upstream I/C profits in the parent's inventory.At the end of the current year, there were $60,000 of downstream intercompany profits in the sub's inventory. Duringthe current year, the sub declare and paid $80,000 in dividends.ParentSub[l-r]Sales$10,000,000$1,000,000Cost of goods sold(6,800,000)(600,000)Gross profit3,200,000400,000[l-e]Income from sub37,125Operating expenses(1,800,000)(270,000)[l-d]Net income$1,437,125$130,000Compute the Income from Sub of $37,125Consolidated Income StatementSalesCost of goods soldGross profitOperating expensesNet incomeNet income attributable to noncontrollinginterestsNet income attributable to the parent

Non-controlling interest refers to the ownership concept when the shareholder of the company owns…

be undervalued by $200,000 and to an unrecorded r period and patent is amortized over an 8-year per tal of $600,000 of I/C sales. The BOY there were $4 the current year, there were $60,000 of downstrea ear, the sub declare and paid $80,000 in dividends. Is sold Parent $10,000,000 (6,800,000) 3,200,000 Sub $1,000,000 (600,000) 400,000