Popper Corporation acquired 100% of the outstanding stock of Schlegel Inc. on January 1, 2011 for $10,000,000. The book value of Schlegels net assets at acquisition was $5,600,000. The excess over book value of $4,400,000 was allocated $1,800,000 to patents and $2,600,000 to goodwill. The patents had an estimated remaining economic life of 15 years at the date of acquisition.

On January 1, 2018, Popper sold Schlegel several pieces of fully depreciated equipment for $450,000. The equipment had originally cost Popper $1,200,000. Schlegel is depreciating this equipment on a straight-line basis over 5 years.

On September 1, 2020, Popper sold Schlegel land that had a book value of $3,200,000 for $3,600,000. Schlegel paid $2,000,000 on September 1, 2020 and the remaining $1,600,000 is due on March 1, 2021.

On October 1, 2020, Popper tested the goodwill for impairment. As a result of this test the entire goodwill of $2,600,000 was deemed to be impaired and written off.

Intra-entity sales (from Schlegel to Popper) of $3,780,000 occurred during 2019 and $5,400,000 in 2020. Schlegel has a gross profit rate of 25% (Gross profit equals 25% of sales). Of the total transfers, $540,000 was still held in inventory (unsold) on December 31, 2019, with $900,000 held in inventory (unsold) on December 31, 2020.

For 2020, the companies had the following account balances:

Popper Schlegel

Sales $27,000,000 $8,600,000

Cost of goods sold 11,400,000 6,450,000

Depreciation expense 1,500,000 480,000

Amortization expense 600,000 80,000

Operating expenses 3,250,000 640,000

Gain on sale of land 400,000 -

Equity income in Schlegel Not given -

Net income Not given $950,000

Required: Prepare a consolidated income statement, in good form, for the year ended December 31, 2020. Show all supporting calculations (but not as part of the income statement proper). Ignore taxes and EPS.