When Parson Company acquired all of Soaper Company's st on July 1, 2013, Soaper's inventory was undervalued by $160,000,000, plant assets with a ten-year1' were overvalued by $200,000,000, and long-term debt which matures in five years was overvalued $100,000,000. No goodwill arose in the combination. All of Soaper's depreciation and amortization chargjes are based on the straight-line method. The undervalued inventory was sold during the year ended June 30,2014. The separate income statements of Parson and Soaper for the year ended June 30,2014, are given below (amounts in millions).

Required
a. Prepare a consolidated income statement for Parson and Soaper for the year ended June 30,2014.
b. Why is consolidated income the same as Parson's separately reported net income?

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Parson Soaper Sales... $5,000 140 $2,000 5,140 3,000 500 100 600 2,000 800 140 60 700 1,700 $ 300 Depreciation expense. Interest expense. Total expenses Net income... . . 4,200 $ 940