The following table shows selected amounts from the separate financial statements of a company (unconsolidated) with two subsidiaries, A and B. Note that 1) During the year subsidiary A sold some inventory to subsidiary B for $1,000 in scenario I and for $1,700 in scenario II. It had cost subsidiary A $1,000. Subsidiary B further sold the inventory to an unrelated party for $2,000. 2) Located in two different countries, subsidiary A and subsidiary B have different income tax rates. Specifically, the rate for subsidiary A is 25% and the rate for subsidiary B is 50%. 3) Companies do not pay tax if their income is equal to or less than zero.

***I have the answers, can someone just explain how to get them?

1. In scenario I, what would be the amount of consolidated sales?

Answer: $2000

2. In scenario I, what would be the amount of consolidated net income?

Answer: $350

3. In scenario II, what would be the amount of consolidated sales?

Answer: $2000

4. In scenario II, what would be the amount of consolidated net income?

Answer: $550

Scenario Scenario 11 Subsidiary A Subsidiary B Consolidated Subsidiary A Subsidiary B Consolidated Sales 1,000 2,000 1,700 2,000 Cost of goods sold 1,000 1,000 1,000 1,700 Gross profit Operating expense 100 100 100 100 Taxable income ? Income tax Net Income