This example is very simple because the owned subsidiary, but need to know when it has different percentages.

Comparative income statement for Prim Corporation and its 100%-owned subsidiary, Saddie Corporation, for the year ended December 31, 2011, are summarized as follows:

	Prim	Saddie
Sales	$1,000,000	$500,000
Income from Saddie	226,000	-
Bond interest income (includes discount amortization)	-	22,000
Cost of sales	(670,000)	(200,000)
Operating expenses	(150,000)	(100,000)
Bond interest expense	(50,000)	-
Net income	$365,000	$222,000

Prim purchased its interest in Saddie at book value on January 1, 2003. On January 1, 2004, Prim sold $500,000 par of 10%, 10-year bonds to the public at par value, and on January 1, 2011, Saddie purchased $200,000 par of the bonds at 97. Both companies use straight-line amortization. There are no other intercompany transactions between the affiliated companies.

Required:

Prepare a consolidated income statement for Prim Corporation and Subsidiary for the year ended December 31, 2011.

======================

Problem 4 This example is very simple because the owned subsidiary, but need to know when it has different percentages. Comparative income statement for Prim Corporation and its 100%-owned subsidiary, Saddie Corporation, for the year ended December 31, 2011, are summarized as follows: Saddie Prim $1,000,000 226,000 $500,000 Sales Income from Saddie Bond interest income 22,000 (includes discount amortization) (200,000) (100,000) Cost of sales (670,000) (150,000) (50,000) $365,000 Operating expenses Bond interest expense $222,000 Net income Prim purchased its interest in Saddie at book value on January 1, 2003. On January 1, 2004, Prim sold $500,000 par of 10%, 10-year bonds to the public at par value, and on January 1, 2011, Saddie purchased $200,000 par of the bonds at 97. Both companies use straight-line amortization. There are no other intercompany transactions between the affiliated companies. Required: Prepare a consolidated income statement for Prim Corporation and Subsidiary for the year ended December 31, 2011