On December 31, 2023, Parent Inc. acquired 100% of SubCo, Inc. for $50 million. The following are historical and fair values of the assets and liabilities

of SubCo on the date of acquisition:

Prior to the acquisition, SubCo prepared an income statement forecast for 2024 and 2025 (again, assume tax rate of zero %). This forecast does not include

any impacts of the effect of the acquisition of SubCo by Parent

After adjusting for the impacts of acquisition accounting, 2024 forecast net income of SubCo included in Parents consolidation should be:

After adjusting for the impacts of acquisition accounting, 2025 forecast net income of SubCo included in Parents consolidation should be:

\begin{tabular}{|c|c|c|} \hline & Book Values & Fair Value \\ \hline Cash & 1,000,000 & 1,000,000 \\ \hline Accounts receivable & 4,000,000 & 4,000,000 \\ \hline Inventory & 3,000,000 & 4,500,000 \\ \hline Intangibles (5-year life) & 0 & 25,000,000 \\ \hline Goodwill & 0 & \\ \hline Total assets & 8,000,000 & \\ \hline Accounts payable and accruals & (3,000,000) & (3,000,000) \\ \hline Equity & (5,000,000) & \\ \hline Total liabilities and net assets & (8,000,000) & \\ \hline \multirow{2}{*}{ Fair value of net assets } & & 21500000 \\ \hline & & \\ \hline \end{tabular} \begin{tabular}{|c|c|c|} \hline & 2024 forecast & 2025 forecast \\ \hline Revenues & 24,000,000 & 28,000,000 \\ \hline Cost of sales & (12,000,000) & (14,000,000) \\ \hline Gross margin & 12,000,000 & 14,000,000 \\ \hline Operating expenses & (3,000,000) & (3,000,000) \\ \hline Net income & 9,000,000 & 11,000,000 \\ \hline \end{tabular}