Preparing a consolidated income statementEquity method with noncontrolling interest and AAP A parent company purchased a 60% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $375,000 in excess of the subsidiarys Stockholders Equity on the acquisition date. This excess was assigned to a building that was estimated to be undervalued by $225,000 and to an unrecorded patent valued at $150,000. The building asset is being depreciated over a 20-year period and the patent is being amortized over a 10-year period, both on the straight-line basis with no salvage value. During the current year, the subsidiary declared and paid $60,000 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: Parent Subsidiary Income statement: Sales $6,000,000 $900,000 Cost of goods sold (4,200,000) (540,000) Gross profit 1,800,000 360,000 Income (loss) from subsidiary 59,850 - Operating expenses (1,140,000) (234,000) Net income $719,850 $126,000 a. Compute the Income (loss) from subsidiary of $59,850 reported by the parent company in its preconsolidation income statement. Do not use negative signs with your answers below. Subsidiary's net income $Answer 126,000 AAP Answer 26,250 Adjusted subsidiary income $Answer 99,750 P % of interest X Answer 60 % Income (loss) from subsidiary $Answer 59,850 b. Prepare the consolidated income statement for the current year. Do not use negative signs with your answers below. Consolidated Income Statement Sales $Answer 6,900,000 Cost of goods sold Answer 4,740,000 Gross profit Answer 2,160,000 Operating expenses Answer 1,374,000 Answer Answer 786,000 Answer Answer 26,250 Answer $Answer 60,000