Peerless Products Corporation acquires 80 percent of the common stock of Special Foods Inc. on December 31, 20X0, for its underlying book value of $240,000. At that date, the fair value of the noncontrolling interest is equal to its book value of $60,000. Additionally:

1. On January 1, 20X1, Special Foods issues 10-year, 12 percent bonds payable with a par value of $100,000; the bonds are issued at a premium, $105,975.19, to yield the current market interest rate of 11%. Nonaffiliated Corporation purchases the bonds from Special Foods.

2. The bonds pay interest on June 30 and December 31.

3. Both Peerless and Special amortize bond discounts and premia using the effective interest method.

4. On December 31, 20X1, Peerless purchases the bonds from Nonaffiliated for $94,823.04 when the bonds carrying value on Specials books is $105,623.04, resulting in a gain of $10,800 on the constructive retirement of the bonds. Note that Peerless purchase price reflects the current market interest rate of 12.992186% when the bonds have 18 payments left to maturity.

5. Special Foods reports net income of $50,152 for 20X1 and $75,192 for 20X2 and declares dividends of $30,000 in 20X1 and $40,000 in 20X2.

6. Peerless earns $140,000 in 20X1 and $160,000 in 20X2 from its own separate operations. Peerless declares dividends of $60,000 in both 20X1 and 20X2.

Required: Prepare the concolidated statement (working sheet for year1 and year 2)