Up and its 80 percent owned subsidiary (Down) reported the following figures for the year ending December 31, 2011. Down paid dividends of $30,000 during this period.

In 2010, unrealized gains of $30,000 on upstream transfers of $90,000 were deferred into 2011.
In 2011, unrealized gains of $40,000 on upstream transfers of $110,000 were deferred into 2012.
a. What figures appear in a consolidated income statement?
b. What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30percent.

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Up Sales Cost of goods sold Operating expenses. Dividend income $(600,000) 300,000 174,000 (24,000) Down $(300,000) 140,000 60,000 Net income $(100,000)