90.2K

Verified Solution

Link Copied!

Comparative income statements of Sub Corporation for the calendar years $2019,2020,$ and $2021$ are as follows $($in thousands$)$:

$201920202021$

Sales$$ $$22,000$ $$18,500$ $$19,250$

Cost of sales$10,6009,90010,100$

Gross profit$11,4008,6009,150$

Operating expenses$5,7005,5006,000$

Net income$5,7003,1006,000$

Additional Information

$1.$ Sub was an $80$ percent$-$owned subsidiary of Pub Corporation throughout the $20192021$ period. Pub$$s separate income $($excludes income from Sub$)$ was $$7,200,000,$ $$6,600,000,$ and $$7,500,000$ in $2019,2020,$ and $2021,$ respectively. Pub acquired its interest in Sub at its underlying book value, which was equal to fair value on July $1,2017.$

$2.$ Pub sold inventory items to Sub during $2019$ at a gross profit to Pub of $$720,000.$ Half the merchandise remained in Sub$$s inventory at December $31,2019.$ Total sales by Pub to Sub in $2019$ were $$1,800,000.$ The remaining merchandise was sold by Sub in $2020.$

$3.$ Pub$$s inventory at December $31,2020,$ included items acquired from Sub on which Sub made a profit of $$410,000.$ Total sales by Sub to Pub during $2020$ were $$1,600,000.$

$4.$ There were no unrealized profits in the December $31,2021$ inventories of either Sub or Pub. $5.$ Pub uses the equity method of accounting for its investment in Sub.

$$

Prepare a schedule of consolidated net income for Pub Corporation and Subsidiary for the years $2019,2020,$ and $2021,$ beginning with the separate incomes of the two affiliates and including non$-$controlling interest computations.

Answer & Explanation Solved by verified expert

See Answer