Question

Small town retail owns 70% of Supplier Corporation’s common stock. For the current financial year, small town supplier reported sales of $450,000 and $300,000 and expenses of $290,000 and $240,000. Based on the preceding information, what is the amount of net income to be reported in the consolidated income statement for the year under the parent company theory approach

Answer 1

Consolidated income statement

$

Sales (450,000 + 300,000) 750,000

Expenses ( 290,000 +240,000) 530,000

Net Income 220,000

Step-by-step explanation:

The net income to be reported in the consolidated income statement is $220,000 which is total net income of both companies