Preparing a consolidated income statementCost method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits 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 $140,000 in excess of the subsidiarys Stockholders Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $90,000 and to an unrecorded Trademark valued at $50,000. The building asset is being depreciated over a 10-year period and the Trademark is being amortized over a 5-year period, both on the straight-line basis with no salvage value. During the current year, the parent and subsidiary reported a total of $250,000 of intercompany sales. At the beginning of the current year, there were $25,000 of upstream intercompany profits in the parents inventory. At the end of the current year, there were $20,000 of downstream intercompany profits in the subsidiarys inventory. During the current year, the subsidiary declared and paid $45,000 of dividends. The parent company uses the cost method of pre-consolidation investment bookkeeping. Each company reports the following income statement for the current year: Parent Subsidiary Income statement: Sales $5,000,000 $500,000 Cost of goods sold (3,400,000) (300,000) Gross profit 1,600,000 200,000 Income (loss) from subsidiary 27,000 - Operating expenses (900,000) (135,000) Net income $727,000 $65,000 a. Starting with the parents current-year pre-consolidation net income of $727,000, compute the amount of current-year net income attributable to the parent that will be reported in the consolidated financial statements. b. Prepare the consolidated income statement for the current year.