Up and its 80 percent owned subsidiary (Down) reported the following figures for the year ending December 31, 2013. Down paid dividends of $30,000 during this period.

In 2012, unrealized gross profits of $30,000 on upstream transfers of $90,000 were deferred into 2013. In 2013, unrealized gross profits of $40,000 on upstream transfers of $110,000 were deferred into 2014.
a. What amounts appear for each line in a consolidated income statement? Explain your computations.
b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30 percent.

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Up (600,000) 300,000 74,000 Down $(300,000) 140,000 Sales Cost of goods sold. 60,000 A,000) $(150,000) $(100,000)