Consolidated income statement (incomplete equity method, downstream sales)The separate inc...

Consolidated income statement (incomplete equity method, downstream sales)

The separate income statements of Pea Corporation and its 90 percent-owned subsidiary, Sea Corporation, for 2011 are summarized as follows (in thousands):

Investigation reveals that the effects of certain intercompany transactions are not included in Pea’s income from Sea. Information about those intercompany transactions follows:

1. Inventories—Sales of inventory items from Pea to Sea are summarized as follows:

2. Plant assets—Pea sold equipment with a book value of $60,000 to Sea for $100,000 on January 1, 2011. Sea depreciates the equipment on a straight-line basis (no scrap) over a four-year period.

REQUIRED

1. Determine the correct amount of Pea’s income from Sea for 2011.

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2. Prepare a consolidated income statement for Pea Corporation and Subsidiary for 2011.