Up and its 80 percent–owned subsidiary (Down) reported the following figures for the year ending December 31, 2018. Down paid dividends of $54,000 during this period.
Up | Down | ||||||
Sales | $ | (1,080,000 | ) | $ | (540,000 | ) | |
Cost of goods sold | 540,000 | 252,800 | |||||
Operating expenses | 313,200 | 108,000 | |||||
Dividend income | (43,200 | ) | 0 | ||||
Net income | $ | (270,000 | ) | $ | (179,200 | ) | |
In 2017, intra-entity gross profits of $54,000 on upstream transfers of $162,000 were deferred into 2018. In 2018, intra-entity gross profits of $71,200 on upstream transfers of $196,400 were deferred into 2019.
What amounts appear for each line in a consolidated income statement?
What income tax expense should appear on the consolidated income statement if each company files a separate return? Assume that the tax rate is 30 percent.
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