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Summer Company sells all its output at 25 percent above cost. Parade Corporation purchases all its inventory from Summer. Selected information on the operations of
Summer Company sells all its output at 25 percent above cost. Parade Corporation purchases all its inventory from Summer. Selected information on the operations of the companies over the past three years is as follows:
Summer Company | Parade Corporation | |||||||||||||
Year | Sales to Parade Corp. | Net Income | Inventory, Dec. 31 | Operating Income | ||||||||||
20X2 | $ | 200,000 | $ | 101,000 | $ | 70,000 | $ | 169,000 | ||||||
20X3 | 175,000 | 91,000 | 105,000 | 253,000 | ||||||||||
20X4 | 243,000 | 161,000 | 129,600 | 316,000 | ||||||||||
Parade acquired 70 percent of the ownership of Summer on January 1, 20X1, at underlying book value. Required: Compute consolidated net income and income assigned to the controlling interest for 20X2, 20X3, and 20X4.
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