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Preparing a consolidated income statement-Equity method with noncontrolling interest and AAP A parent company purchased a 65% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $250,000 in excess of the subsidiary's Stockholders' Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $150,000 and to an unrecorded patent valued at $100,000. The building asset is being depreciated over a 20-year period and the patent is being amortized over a 10-year period, both on the straight-line basis with no salvage value. During the current year, the subsidiary declared and paid $40,000 of dividends. The parent company uses the equity method of pre-consolidation investment bookkeeping. Each company reports the following income statement for the current year: Parent Subsidiary Income statement: Sales $6,000,000 $600,000 Cost of goods sold (4.200,000) (360.000) Gross profit 1,800,000 240.000 Income (loss) from subsidiary 43,225 Operating expenses (1.140,000) (156,000) Net income $703,225 $84.000 a. Compute the Income (loss) from subsidiary of $43,225 reported by the parent company in its preconsolidation income statement. Do not use negative signs with your answers below. Subsidiary's net income $ 84,000 7.500 X Adjusted subsidiary income $ 240,000 X P% of interest X 6596 Income (loss) from subsidiary $ 43,225 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers below. Consolidated Income Statement Sales $ 6,600,000 Cost of goods sold 4,560,000 Gross profit 2,040,000 Operating expenses 1,296,000 x Net income 726,500 Net income attributable to noncontrolling interests 23,275 Net income attributable to the parent $ 703.225