A summary of the separate income of Pod Corporation and the net income of its 75 percent-owned subsidiary, Sev Corporation, for 2011 is as follows:
Pod Sev
Sales ............................................................ $250,000 ............... $150,000
Gain on sale of machinery ....................................... 5,000
Cost of good sold ............................................ (100,000) ................. (65,000)
Depreciation expense ......................................... (25,000) ................. (15,000)
Other expenses ................................................ (40,000) ................. (20,000)
Separate income (excludes investment income) .......... $ 90,000 ................. $ 50,000
Sev Corporation sold machinery with a book value of $20,000 to Pod Corporation for $32,500 on January 2, 2009. At the time of the intercompany sale, the machinery had a remaining useful life of five years. Pod uses straight-line depreciation. Pod used the machinery until December 28, 2011, when it was sold to another entity for $18,000.
REQUIRED
Prepare a consolidated income statement for Pod Corporation and Subsidiary for 2011.