Illustrative Problem $-$ Downstream Sale of Inventory

Several years ago, Quarantine Company purchased $80\%$ interest of Lockdown Company for an amount equal to the fair

value of Lockdown's net assets. On March $2,2024,$ Quarantine sold inventory to Lockdown for P$150,000$ of which

P$50,000$ was unsold as of December $31,2024.$ The beginning inventory of Lockdown includes P$30,000$ worth of

merchandise purchased from Quarantine. For the year ended December $31,2024,$ Quarantine reported profit of P$200,000$

and paid dividends of $P90,000$ and $P45,000$ respectively for $2024.$ Quarantine sells merchandise at a profit rate of $25\%$

based on cost while Lockdown has a profit rate of $30\%$ based on costs. Requirements:

Working paper elimination entries

Compute the consolidated net income