Preparing a consolidated income statement - with noncontrolling interest, but no AAP or intercompany profits A parent company purchased an 80% interest in its subsidiary several years ago with no AAP (i.e., purchased at book value). Each reports the following income statement for the current year. Parent Subsidiary Income statement: Sales Cost of goods sold Gross profit Income (loss) from subsidiary Operating expenses Net income Income (loss) from subsidiary $7,500,000 $1,125,000 (5,250,000) (675,000) 2,250,000 450,000 126,000 (1,425,000) $951,000 0 a. Compute the income (loss) from subsidiary of $126,000 reported by the parent company. Sales Cost of goods sold Gross profit Income (loss) from subsidiary Operating expenses (292,500) $157,500 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers. Consolidated Income Statement S 0 $ 0 0 0 0 0 0 0 0

Preparing a consolidated income statement - with noncontrolling interest, but no AAP or intercompany profits A parent company purchased an 80% interest in its subsidiary several years ago with no AAP (i.e., purchased at book value). Each reports the following income statement for the current year. Parent Subsidiary Income statement: Sales Cost of goods sold Gross profit Income (loss) from subsidiary Operating expenses Net income Income (loss) from subsidiary $7,500,000 $1,125,000 (5,250,000) (675,000) 2,250,000 450,000 126,000 (1,425,000) $951,000 0 a. Compute the income (loss) from subsidiary of $126,000 reported by the parent company. Sales Cost of goods sold Gross profit Income (loss) from subsidiary Operating expenses (292,500) $157,500 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers. Consolidated Income Statement S 0 $ 0 0 0 0 0 0 0 0

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Preparing a consolidated income statement - with noncontrolling interest, but no AAP or intercompany profits
A parent company purchased an 80% interest in its subsidiary several years ago with no AAP (i.e., purchased at book value). Each reports the following
income statement for the current year.
Parent Subsidiary
Income statement:
Sales
Cost of goods sold
Gross profit
Income (loss) from subsidiary
Operating expenses
Net income
Income (loss) from subsidiary
$7,500,000 $1,125,000
(5,250,000) (675,000)
2,250,000 450,000
126,000
(1,425,000)
$951,000
Sales
Cost of goods sold
Gross profit
Income (loss) from subsidiary
Operating expenses
0
a. Compute the income (loss) from subsidiary of $126,000 reported by the parent company.
(292,500)
$157,500
b. Prepare the consolidated income statement for the current year.
Do not use negative signs with your answers.
Consolidated Income Statement
S
0
$
0
0
0
0
0
0
0
0

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