Parent Company purchased a 80% interest in Sub Company at BV five years ago. Each reports the following income statement for the current year:

Income Statement: Parent Sub

Sales $9,000,000 $750,000

Cost of goods sold -4,200,000 -260,000

Gross Profit 4,800,000 490,000

Income (loss) from subsidiary 112,000

Operating expenses -2,500,000 -350,000

Net income $2,412,000 $140,000

Required:

a. Compute the income (loss) from subsidiary of $112,000 reported by the Parent Company.

b. Prepare the consolidated income statement for the current year