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The following table shows selected amounts from the separate financial statements of a parent company (unconsolidated) and one of its subsidiaries. Note that 1) the

The following table shows selected amounts from the separate financial statements of a parent company (unconsolidated) and one of its subsidiaries. Note that 1) the parent company owns 100% of the subsidiary; 2) During the year the parent company sold some inventory to the subsidiary for $1,000 in scenario I and for $1,700 in scenario II. It had cost the parent company $1,000. The subsidiary further sold the inventory to an unrelated party for $2,000. 3) Located in two different countries, the parent company and the subsidiary have different income tax rates. Specifically, the rate for the parent company is 25% and the rate for the subsidiary is 50%. 4) Companies do not pay tax if their income is equal to or less than zero.

Please calculate and fill the cells with question marks.

Scenario I

Scenario II

Parent Company ($)

Subsidiary ($)

Parent Company ($)

Subsidiary ($)

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

?

?

?

?

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