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Up and its 80 percent–owned subsidiary (Down) reported the following figures for the year ending December...

Up and its 80 percent–owned subsidiary (Down) reported the following figures for the year ending December 31, 2018. Down paid dividends of $43,000 during this period.

Up Down
Sales $ (860,000 ) $ (430,000 )
Cost of goods sold 430,000 201,100
Operating expenses 249,400 86,000
Dividend income (34,400 ) 0
Net income $ (215,000 ) $ (142,900 )

in 2017, intra-entity gross profits of $43,000 on upstream transfers of $129,000 were deferred into 2018. In 2018, intra-entity gross profits of $56,900 on upstream transfers of $156,800 were deferred into 2019.

  1. What amounts appear for each line in a consolidated income statement?

  2. 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.

  1. What amounts appear for each line in a consolidated income statement?

  2. 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.

  1. What amounts appear for each line in a consolidated income statement?

  2. 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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