Reference no: EM132873152
Question - Norco Company is an 80%-owned subsidiary of Victory Corporation. The separate income statements of the two companies for 2016 are as follows:
Victory Corporation Norco Company
Sales $220,000 $150,000
Cost of goods sold (150,000) (112,500)
Gross profit $70,000 $37,500
Other expenses (40,000) (15,000)
Other income 5,000
Operating income $35,000 $22,500
Subsidiary income 14,400
Net income $49,400 $22,500
The following facts apply to 2016:
a. Norco Company sold $90,000 of goods to Victory Corporation. The gross profits on sales to Victory and to unrelated companies are equal and have not changed from the previous years.
b. Victory Corporation held $20,000 of the goods purchased from Norco Company in its beginning inventory and $30,000 of such goods in ending inventory.
c. Victory Corporation billed Norco Company $5,000 for computer services. The charge was expensed by Norco Company and treated as other income by Victory Corporation.
Required - Prepare the consolidated income statement for 2016, including the distribution of the consolidated net income to the controlling and noncontrolling interests. The supporting income distribution schedules should be prepared as well.