Elimination of intercompany profits for variable interest entities (VIES) and voting interest entities Assume that on January 1, 2019, a Reporting Company acquires a 35 percent interest in a Legal Entity for $392,000 cash. The fair value of the 65 percent interest not acquired by the Reporting Company is $728,000. The fair value and book value of the identifiable net assets of the Legal entity equals $1,120,000. The Reporting Company has a right to 35 percent of the reported income (loss) of the Legal Entity. The Legal Entity is determined to be a VIE, and the Reporting Company is determined to be primary beneficiary. For the year ended December 31, 2019, the Reporting Company and the VIE reported the following pre-consolidation income statements assuming that the Reporting Company applies the equity method: Sales Costs of goods sold Gross profe Operating expenses Equity method income dou) from VIE Net income Reporting Company VIE $1.232,000 $336,000 (739,200) (224.000 492.800 112,000 (197,120) (33,600) 139,760) $255,920 $78,400 Assume that the Legal Entity's income statement for the year ended December 31, 2019 includes sales to the Reporting Company, and $168,000 of these sales are still in Reporting Company's ending inventory. On intercompany sales, the Legal Entity earns a gross profit equal to 40 percent of sales price. Assume that all of these intercompany items are in the ending inventory of the Reporting Company on December 31, 2019 a Show how the Equity method income (loss) from VIE is computed. Note: Use a negative sign with answer only to indicate equity method loss from VIE Reporting company's portion of Vit's net income s impact of intercompany sales in equity income Equity method income foss) from VE 0 b. Compute the amount of consolidated net income so c. Compute the amount of consolidated net income attributable to the noncontrolling interest o d. Compute the amount of consolidated net income attributable to the controlling interest $0 e. How would your answers to items (b) through (d) change if the Legal Entity is a "voting interest entity? Consolidated net income $ Consolidated net income attributable to noncontrolling interest Consolidated net income attributable to controlling interest $ Chack