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Large Corporation purchased an 90 percent interest in Small Corporation for $900,000 on January 1, 2016, at which time Smallns stockholders equity consisted of $700,000

Large Corporation purchased an 90 percent interest in Small Corporation for $900,000 on January 1, 2016, at which time Smallns stockholders equity consisted of $700,000 common stock and $200,000 retained earnings. The excess fair value over book value was goodwill. Comparative income statements for the two corporations for 2017 are as follows

Large Small
Sales $2,500 $1,000
Income from Son 300
Cost of sales (1,000) (500)
Depreciation expense (250) (75)
Other expenses (250) (100)
Net income $1,300 $325

Dividends of Large and Small for all of 2017 were $500,000 and $200,000, respectively. During 2016 Small sold inventory items to Large for $150,000. This merchandise cost Small $100,000, and one-fifth of it remained in Larges December 31, 2016, inventory. During 2078 Smalls sales to Large were $160,000. This merchandise cost Small $120,000, and one-half of it remained in Larges December 31, 2017, inventory.

Prepare a consolidated income statement for Large Corporation and Subsidiary for the year ended December 31, 2017. (show all work/computations to support answer)

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