E3-10 Prepare consolidated income statement three years after acquisition Comparative income statements of Pop Corporation and Son Corporation for the year ended December 31, 2018, are as follows (in thousands):

Pop Son Sales $3,200 $1,000 Income from Son 261 —
Total revenue 3,461 1,000 Less: Cost of goods sold 1,800 400 Operating expenses 800 300 Total expenses 2,600 700 Net income $ 861 $ 300 ADDITIONAL INFORMATION 1. Son is a 90 percent–owned subsidiary of Pop, acquired by Pop for $1,620,000 on January 1, 2016, when Son’s stockholders’ equity at book value was $1,400,000.
2. The excess of the cost of Pop’s investment in Son over book value acquired was allocated $60,000 to undervalued inventories that were sold in 2016, $40,000 to undervalued equipment with a four-year remaining useful life, and the remainder to goodwill.
REQuIRED: Prepare a consolidated income statement for Pop Corporation and Subsidiary for the year ended December 31, 2018.
p R O B L E M S