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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 $1,050,000 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 $600,000 and to an unrecorded patent valued at $450,000. The building asset is being depreciated over a 15-year period and the patent is being amortized over an 10-year period, both on the straight-line basis with no salvage valu During the current year, the parent and subsidiary reported a total of $1,800,000 of intercompany sales. At the beginning of the current year, there were $120,000 of upstream intercompany profits in the parent's inventory. At the end of the current year, there were $180,000 of downstream intercompany profits in the subsidiary's inventory. During the current year, the subsidiary declared and paid $240,000 of dividends. The parent company uses the equity method of pre-consolidation investment bookkeeping. Each company reports the following incom statement for the current year: Parent Subsidiary Income statement: Sales $10,000,000 $3,000,000 Cost of goods sold (6,800,000) (1,800,000) Gross profit 3,200,000 1,200,000 Income (loss) from subsidiary 117.500 Operating expenses (1,800,000) (810,000) Net income $1,517,500 $390,000 $ 0 a. Compute the Income (loss) from subsidiary of $117,500 reported by the parent company in its preconsolidation income statement. Do not use negative signs with your answers below. Subsidiary's net income 0 Upstream sales Adjusted subsidiary income $ 0 P% of interest X 096 0 0 0 Downstream sales 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 0 Cost of goods sold 0 Gross profit 0 Operating expenses 0 0 $ 0