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The comparative consolidated income statements of a parent and its 75%-owned subsidiary were prepared incorrectly as at December 31 and are shown in the table

The comparative consolidated income statements of a parent and its 75%-owned subsidiary were prepared incorrectly as at December 31 and are shown in the table given below. The following items were overlooked when the statements were prepared:

  • The Year 5 gain on sale of assets resulted from the subsidiary selling equipment to the parent on September 30. The parent immediately leased the equipment back to the subsidiary at an annual rental of $31,200. This was the only intercompany rent transaction that occurred each year. The equipment had a remaining life of five years on the date of the intercompany sale.
  • The Year 6 gain on sale of assets resulted from the January 1 sale of a building, with a remaining life of seven years, by the subsidiary to the parent.
  • Both gains were taxed at a rate of 40%.

CONSOLIDATED INCOME STATEMENTS
Year 5 Year 6
Miscellaneous revenues $ 830,000 $ 905,000
Gain on sale of assets 20,800 53,200
Rental revenue 7,800 31,200
858,600 989,400
Miscellaneous expenses 412,600 495,540
Rental expense 63,900 69,100
Depreciation expense 91,000 91,900
Income tax expense 89,000 102,500
Non-controlling interest 40,500 7,080
697,000 766,120
Net income $ 161,600 $ 223,280

Required:

Prepare correct consolidated income statements for Years 5 and 6. (Input all values as positive numbers. Leave no cells blank - be certain to enter zero wherever required. Omit $ sign in your response.)

Parent Company
Corrected Consolidated Income Statements
Years 5 and 6
Year 5 Year 6
Miscellaneous revenues $ $
Miscellaneous expense
Rent expense
Depreciation expense
Income tax expense
Consolidated net income $ $
Attributable to:
Shareholders of Parent $ $
NCI
$ $

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