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 following table. 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 $12,000. 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%.

Required:
Prepare correct consolidated income statements for Years 5 and 6.

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CONSOLIDATED INCOME STATEMENTS Year 5 Year 6 $750,000 $825,000 42,000 12,000 879,000 492,340 64,300 80,700 94,500 5,160 737,000 $120,000 $142,000 Miscellaneous revenues Gain on sale of assets Rental revenue Miscellaneous expenses Rental expense Depreciation expense Income tax expense Non-controlling interest 8,000 3,000 761,000 399,800 52,700 75,000 81,000 32,500 641,000 Net income