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and AAP Preparing a con Equity method Wit ling 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 $450,000 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 $270,000 and to an unrecorded patent valued at $180,000. The building is being depreciated over a 20-year period and the patent is being amortized over a 10-year period, both on the straight-line basis with no salvage value. During the current year, the subsidiary declared and paid $36,000 of dividends. The parent company uses the equity method of pre-consolidation investment bookkeeping. Each company reports the following income statement for the current year: Parent Subsidiary Income statement: Sales $8,100,000 $1,080,000 Cost of goods sold (5,760,000) (630,000) Gross profit 2,340,000 450,000 Income (loss) from subsidiary 103,950 Operating expenses (1,620,000) (270,000) Net income $823,950 $180,000 a. Compute the Income (loss) from subsidiary of $103,950 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 Adjusted subsidiary income P % of interest Income (loss) from subsidiary $ $ 0 X 0 % 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 0 Cost of goods sold Gross profit Operating expenses 0 0 0 0 $ 0