Preparing a consolidated income statementEquity method with noncontrolling interest, AAP and upstream intercompany depreciable asset profits

A parent company purchased a 75% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $208,000 in excess of the subsidiary's Stockholders' Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $144,000 and to an unrecorded Customer List valued at $64,000. The building asset is being depreciated over a 10-year period and the Customer List is being amortized over a 5-year period, both on the straight-line basis with no salvage value. During a previous year, the subsidiary sold to the parent company a piece of depreciable property. The unconfirmed upstream gain on this intercompany transaction was $48,000 at the beginning of the current year. The upstream gain confirmed each year is $12,000. During the current year, the subsidiary declared and paid $68,000 of dividends. The parent company uses the equity method of pre-consolidation investment bookkeeping. Each company reports the following income statement for the current year:

INCOME Statement: Sales $9,200,000 $1,920,000 Cost of goods sold (5,920,000) (1,200,000) Gross profit 3,280,000 720,000 Income (loss) from subsidiary 158,600 Operating expenses (2,240,000) (480,000) Net income $1,208,600 $240,000 Subsidiary's net income $ AAP Confirmed upstream gain Adjusted subsidiary income $ P % of interest X % Income (loss) from subsidiary $Consolidated Income Statement Sales $ Cost of goods sold Gross profit Operating expenses 4P 4P 4P