The separate income statements of Pea Corporation and its 90 percent-owned subsidiary, Sea Corporation, for 2011 are summarized as follows (in thousands):

Investigation reveals that the effects of certain intercompany transactions are not included in Pea's income from Sea. Information about those intercompany transactions follows:1. Inventories'Sales of inventory items from Pea to Sea are summarized as follows:

2. Plant assets'Pea sold equipment with a book value of $60,000 to Sea for $100,000 on January 1, 2011. Sea depreciates the equipment on a straight-line basis (no scrap) over a four-year period.REQUIRED1. Determine the correct amount of Pea's income from Sea for 2011.2. Prepare a consolidated income statement for Pea Corporation and Subsidiary for2011.

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Pea Sea $600 Sales Income from Sea $1.000 90 Gain on equipment Cost of sales Other expenses 40 (600) (400) (200) (100) $ 330 Net income $100