Consolidated Income Statement

When Parson Company acquired all of Soaper Companys stock on July 1, 2019, Soapers inventory was undervalued by $160,000,000, plant assets with a 10-year life were overvalued by $200,000,000, and long-term debt which matures in five years was overvalued by $100,000,000. No goodwill arose in the combination. All of Soapers depreciation and amortization charges are based on the straight-line method. The undervalued inventory was sold during the year ended June 30, 2020. The separate income statements of Parson and Soaper for the year ended June 30, 2020, follow (amounts in millions).

	Parson		Soaper
Sales	$5,000		$2,000
Equity in net income of Soaper	140		--
Total revenue	5,140		2,000
Cost of goods sold	3,000		800
Depreciation expense	500		140
Interest expense	100		60
Other expenses	600		700
Total expenses .	4,200		1,700
Net income	$940		$300

Required

Prepare a consolidated income statement for Parson and Soaper for the year ended June 30, 2020.

Consolidated Income Statement For the Year Ended June 30, 2020
(in millions)
Sales		Answer
Cost of goods sold		Answer
Gross margin		Answer
Depreciation expense		Answer
Interest expense		Answer
Other expenses		Answer
Total operating expenses		Answer
Net income		Answer