Preparing a consolidated income statement-Equity method with noncontrolling interest and AAP A parent company purchased a 65% controlling interest in its subsidiary several years ago. The aggregate fair value of the controlling and noncontrolling interest was $500,000 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 $300,000 and to an unrecorded patent valued at $200,000. 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 $80,000 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 56,000,000 $1,200,000 Cost of woods sold (4,200,000) (720,000) Gross profit 1.800.000 450,000 Income loss from subsidiary 86.450 Operating expenses 11.140,000) (312.000) Net Income 5746,450 $168.000 5 a. Compute the income (loss) from subsidiary of $86,450 reported by the parent company in its preconsolidation income statement Do not use negative signs with your answers below. Subsidiary's niet income AAP Adjusted subsidiary income $ p. 9 of interest Income (los) from subsidiary 5 X b. Prepare the consolidated income statement for the current year, Do not use negative signs with your answers below Consolidated Income Statement Sales Cost of goods sold Gross profit Operating expenses $ . e 5