Consolidated Income Statement, Intercompany Transactions (DO NOT POST PREVIOUS ANSWERS. THEY ARE WRONG)

Condensed income statements for Pon and its 80 percent-owned subsidiary, Star, appear below.

Condensed Income Statements	Pon	Star
Sales	$9,000,000	$4,000,000
Equity in net income of Star	439,000	--
Cost of goods sold	(6,000,000)	(2,500,000)
Other expenses	(2,000,000)	(600,000)
Net income	$1,439,000	$900,000

Intercompany sales are $1,500,000. Unconfirmed intercompany profit in Pons beginning inventory is $100,000, and unconfirmed intercompany profit in Pons ending inventory is $120,000. Unconfirmed intercompany profit in Stars beginning inventory is $90,000, and unconfirmed intercompany profit in Stars ending inventory is $50,000. At the date of combination four years ago, previously unrecorded identifiable intangibles (8-year life, straight-line) of $800,000 were recognized. Because the acquisition cost included a control premium, total goodwill recognized at the date of acquisition is shared with the noncontrolling interest in a 90:10 ratio. This years goodwill impairment loss is $250,000.

Required

a. Prepare a schedule to compute Pons equity in net income and the noncontrolling interest in net income.

• Use negative signs with answers that reduce net income amounts.
• Enter answers using all zeros (do not abbreviate to millions or thousands).

		Total	Equity in NI	Noncontrolling Interest in NI
Stars reported net income		Answer	Answer	Answer
Amortization of identifiable intangibles		Answer	Answer	Answer
Goodwill impairment loss		Answer	Answer	Answer
Confirmed profit in BI - upstream		Answer	Answer	Answer
Confirmed profit in BI - downstream		Answer	Answer	Answer
Unconfirmed profit in EI - upstream		Answer	Answer	Answer
Unconfirmed profit in EI - downstream		Answer	Answer	Answer
		Answer	Answer	Answer

b. Prepare a condensed consolidated income statement for Pon and Star.

• Do not use negative signs with any of your answers below.
• Enter answers using all zeros (do not abbreviate to millions or thousands).

Pon and Star Consolidated Income Statement
Sales		Answer
Cost of goods sold		Answer
Other expenses		Answer
Consolidated net income		Answer
Less consolidated NI attributed to NCI		Answer
Consolidated net income attributed to controlling interest		Answer