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On January 1^st.2016, Corporation acquired 80% of the common shares of the Y Company for $1,560,000. At that date, Ys assets and liabilities for the following book and fair values:

Y Company

January 1^st. 2016

Book Value..Fair Value

Cash$ 120,000.$ 120,000

Accounts receivable.. 330,000.. 325,000

Inventory.. 450,000. 420,000

Equipment.2,000,000. 2,200,000

TOTAL ASSETS$2,900,000..$3,065,000

Accounts payable. 365,000.400,000

Bonds Payable 600,000. 650,000

Common Stock. 1,100,000

Retained Earnings.. .835,000

TOTAL LIABILITIES& OWNERS EQUITY..2,900,000

As of January 1,2016, the equipment had a remaining useful life of 8 years. Inventory on hand on January 1, 2016, was all sold by December 31^st, 2016. The bonds payable had a remaining useful life of 4 years and the accounts receivable and payable were settled in March of 2016.

X uses the cost method to account for its investment in Y. The companies balance sheets at December 31^st. 2020, and the income statements for the year 2020 are given below:-

X CORPORATION AND Y CORPORATION

Balance Sheets

December 31^st. 2020

X..Y

Cash$ 545,000.$ 210,000

Accounts receivable 825,000.. 540,000

Inventory1,140 000. 600,000

Equipment, net2,055,000 2,250,000

Investment in Y..1,560,000..0..

TOTAL ASSETS$6,125,000$3,600,000

Accounts payable 825,000.. 300,000

Bonds payable 1,050,000 600,000

Common shares 1,900,000.. 780,000

Retained Earnings.. 2,350,000...1,920,000

TOTAL LIABILITIES& OWNERS EQUITY. $ 6,125,000..$3,600,000

X CORPORATION AND Y CORPORATION

Income Statements

Year ended December 31,2020

X..Y

Sales..$7,500,000$4,500,000

Cost of Goods sold.5,250,000. 3,600,000

Gross Profit.2,250,000. 900,000

Selling and administrative expenses. 900,000 525,000

Amortization expense. 180,000 82,500

Interest expense. 90,000. 37,500

Income before income tax expenses. $1,080,000 $255,000

Income taxes 372,000 90,000

NET INCOME $ 708,000..$ 165,000

Additional Information:-

1. During 2019 and 2020 Y sold inventory to Y with a 20% gross profit as follows:-

2020.2019

Intercompany sales-Y to X$ 525,000$ 450,000

Ys goods remaining in Xs inventory at December 31 150,000.. 120,000

2. During 2019 and 2020 X sold inventory to Y at a 25% mark up on cost as follow:-

20202019

Intercompany sales X to Y..300,000350,000

Xs goods remaining in Ys inventory100,000150,000

3. On July 1^st. 2018, X sold Y equipment with a net book value of $60,000 for cash consideration of $165,000. The equipment originally cost X $135,000. It had a useful remaining life of four years at the date of the intercompany sale.
4. On July 1^st 2018 , X sold Y a piece of land for $200,000. The land had originally cost X $150,000. Y still has the land which was paved as a parking lot for employees car.
5. X paid dividends of $100,000 in the year and Y paid $80,000.
6. Both companies use a 40% tax rate.

Required:-

1. Prepare the consolidated net income for 2020