Preparing a consolidated income statement-Equity method with noncontrolling interest, AAP upstream and downstream intercompany inventory profits A parent company purchased an 80% controlling interest in its subsidiary several years ago. The aggre- pate fair value of the controlling and noncontrolling interest was $360,000 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 $216,000 and to an unrecorded patent valued at $144,000. The building asset is being depreciated over a 16-year period and the patent is being amortized over an 8-year period, both Consolidated Financial Statements with Less Than 100% Own 366 Chapter 5 ent and subsidiary ent year, there were od of the current year, tory. During the cur- any uses the equity following income on the straight-line basis with no salvage value. During the current year, the parent an reported a total of 540,000 of intercompany sales. At the beginning of the current year $37,800 of upstream intercompany profits in the parent's inventory. At the end of the there were $58,500 of downstream intercompany profits in the subsidiary's inventory. Dur rent year, the subsidiary declared and paid $81,000 of dividends. The parent company uses method of pre-consolidation investment bookkeeping. Each company reports the followin statement for the current year: Parent Subsidiary $1,170,000 (540,000) 630,000 Income statement: Sales..... Cost of goods sold.. Gross profit. .......... Income (loss) from subsidiary.... Operating expenses.... Net income...... $8.280.000 (5,400,000) 2,880,000 133,740 (2,160,000) $ 853,740 (396,000) $ 234,000 a. Compute the Income (loss) from subsidiary of $133,740 reported by the parent company in its pre-consolidation income statement. Prepare the consolidated income statement for the current year. - Fruit method with noncontrolling interest, AAP and b