Preparing a consolidated income statement-Equity method with noncontrolling interest, AAP and upstream and downstream intercompany inventory profits A parent company purchased a 70% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $525.000 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 $300,000 and to on unrecorded patent valued at $225.000. The building asset is being deprecated over 15 year period and the patent is being amortized ewer an 10-year period, both on the straight line basks with no salvage value. During the current year, the parent and subsidiary reported a total of 1900,000 of intercompany sales. At the beginning of the current year, there were 560,000 of upstream intercompany profits in the parents inventory. At the end of the current year, there were 590,000 of downstream intercompany profits in the subsidurys Inventory. During the current year, the subsidiary declared and paid $120,000 of dividends. The parent compary uses the equity method of pre consolidation investment bookkeeping, Fach company reports the following income statement for the current year Subsidiary Parent Income statement: Sales $10,000,000 $1,500,000 Cost of goods sold (6,800,000) (900,000) Gross 3,200,000 600,000 profit Income (loss) from subsidiary Operating expenses Net 58,750 (1,800,000) (405,000) income $1,458,750 $195,000 a. Compute the income (loss) from subsidiary of $58,750 reported by the parent company in its preconsolidation income statement. Do not use negative signs with your answers below. Subsidiary's net income $ 0 AAP 0 Upstream sales Adjusted subsidiary income 5 P9 of interest X 0 0 0 0 0 0 Downstream sales Income doss) from subsidiary 5 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers below. $ 0 0 Consolidated Income Statement Sales Cost of goods sold Gross profit Operating expenses o olo olo $