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Preparing a consolldated Income statement-Equity method with hohcontrolling Interest and AAP A parent company purchased a 60% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $875,000 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 $525,000 and to an unrecorded patent valued at $350,000. 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 $140,000 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 $2,100,000 Cost of goods sold (4,200,000) (1,260,000) Gross profit 1,800,000 840,000 Income (loss) from subsidiary 139,650 Operating expenses (1,140,000) (546,000) Net income $799,650 $294,000 a. Compute the Income (loss) from subsidiary of $139,650 reported by the parent company in its preconsolidation income statement. Do not use negative signs with your answers below. Subsidiary's net income $ AAP 0 Adjusted subsidiary income $ P% of interest Income (loss) from subsidiary $ 0 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers below. Consolidated Income Statement Sales Cost of goods sold Gross profit Operating expenses Preparing a consolldated Income statement-Equity method with hohcontrolling Interest and AAP A parent company purchased a 60% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $875,000 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 $525,000 and to an unrecorded patent valued at $350,000. 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 $140,000 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 $2,100,000 Cost of goods sold (4,200,000) (1,260,000) Gross profit 1,800,000 840,000 Income (loss) from subsidiary 139,650 Operating expenses (1,140,000) (546,000) Net income $799,650 $294,000 a. Compute the Income (loss) from subsidiary of $139,650 reported by the parent company in its preconsolidation income statement. Do not use negative signs with your answers below. Subsidiary's net income $ AAP 0 Adjusted subsidiary income $ P% of interest Income (loss) from subsidiary $ 0 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers below. Consolidated Income Statement Sales Cost of goods sold Gross profit Operating expenses