Comparative income statements of Sub Corporation for the calendar years 2019, 2020, and 2021 are as follows (in thousands): 2019 2020 2021Sales $22,000 $18,500 $19,250Cost of sales 10,600 9,900 10,100Gross profit 11400 8600 9150Operating expenses 5,700 5,500 6,000Net income $ 5700 $ 3100 $ 3150ADDITIONAL INFORMATION1. Sub was an 80 percent-owned subsidiary of Pub Corporation throughout the 2019–2021 period. Pub’s separate income (excludes income from Sub) was $7,200,000, $6,600,000, and $7,500,000 in 2019, 2020, and 2021, respectively. Pub acquired its interest in Sub at its underlying book value, which was equal to fair value on July 1, 2017.2. Pub sold inventory items to Sub during 2019 at a gross profit to Pub of $720,000. Half the merchandise remained in Sub’s inventory at December 31, 2019. Total sales by Pub to Sub in 2019 were $1,800,000. The remaining merchandise was sold by Sub in 2020.3. Pub’s inventory at December 31, 2020, included items acquired from Sub on which Sub made a profit of $410,000. Total sales by Sub to Pub during 2020 were $1,600,000.4. There were no unrealized profits in the December 31, 2021 inventories of either Sub or Pub.5. Pub uses the equity method of accounting for its investment in Sub.REQUIRED1. Prepare a schedule showing Pub’s income from Sub for the years 2019, 2020, and 2021.2. Compute Pub’s net income for the years 2019, 2020, and 2021. 3. Prepare a schedule of consolidated net income for Pub Corporation and Subsidiary for the years 2019, 2020, and 2021, beginning with the separate incomes of the two affiliates and including non-controlling interest computations.
Comparative income statements of Sub Corporation for the calendar years 2019, 2020, and
2021 are as follows (in thousands):
2019
2020 2021
Sales
$22,000
$18,500 $19,250
Cost of sales
10,600
9,900 10,100
Gross profit
11400
8600
9150
Operating expenses 5,700 5,500 6,000
Net income
$ 5700 $ 3100
$ 3150
ADDITIONAL INFORMATION
1. Sub was an 80 percent-owned subsidiary of Pub Corporation throughout the 2019–2021
period. Pub’s separate income (excludes income from Sub) was $7,200,000, $6,600,000, and
$7,500,000 in 2019, 2020, and 2021, respectively. Pub acquired its interest in Sub at its
underlying book value, which was equal to fair value on July 1, 2017.
2. Pub sold inventory items to Sub during 2019 at a gross profit to Pub of $720,000. Half the
merchandise remained in Sub’s inventory at December 31, 2019. Total sales by Pub to Sub in
2019 were $1,800,000. The remaining merchandise was sold by Sub in 2020.
3. Pub’s inventory at December 31, 2020, included items acquired from Sub on which Sub
made a profit of $410,000. Total sales by Sub to Pub during 2020 were $1,600,000.
4. There were no unrealized profits in the December 31, 2021 inventories of either Sub or
Pub.
5. Pub uses the equity method of accounting for its investment in Sub.
REQUIRED
1. Prepare a schedule showing Pub’s income from Sub for the years 2019, 2020, and 2021.
2. Compute Pub’s net income for the years 2019, 2020, and 2021.
3. Prepare a schedule of consolidated net income for Pub Corporation and Subsidiary for the
years 2019, 2020, and 2021, beginning with the separate incomes of the two affiliates and
including non-controlling interest computations.
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