A summary of the separate income of Pod Corporation and the net income of its 75 percent-owned subsidiary, Sev Corporation, for 2011 is as follows:
| Pod | Sev |
Sales | $250,000 | $150,000 |
Gain on sale of machinery | 5,000 | a |
Cost of good sold | (100,000) | (65,000) |
Depreciation expense | (25,000) | (15,000) |
Other expenses | (40,000) | (20,000) |
Separate income (excludes investment income) | $ 90,000 | $ 50,000 |
Sev Corporation sold machinery with a book value of $20,000 to Pod Corporation for $32,500 on January 2, 2009. At the time of the intercompany sale, the machinery had a remaining useful life of five years. Pod uses straight-line depreciation. Pod used the machinery until December 28, 2011, when it was sold to another entity for $18,000.
REQUIRED: Prepare a consolidated income statement for Pod Corporation and Subsidiary for 2011.
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