Prepare consolidated income statement three years after acquisition
Comparative income statements of Pek Corporation and Slo Corporation for the year ended December 31, 2013, are as follows (in thousands):
|
Pek |
Slo |
|
|
Sales |
$3,200 |
$1,000 |
|
Income from Slo |
261 |
— |
|
Total revenue |
3,461 |
1,000 |
|
Less: Cost of goods |
1,800 |
400 |
|
Operating expenses |
800 |
300 |
|
Total expenses |
2,600 |
700 |
|
Net income |
$ 861 |
$ 300 |
ADDITIONAL INFORMATION
1. Slo is a 90 percent owned subsidiary of Pek, acquired by Pek for $1,620,000 on January 1, 2011, when Slo’s stockholders’ equity at book value was $1,400,000.
2. The excess of the cost of Pek’s investment in Slo over book value acquired was allocated $60,000 to undervalued inventories that were sold in 2011, $40,000 to undervalued equipment with a four year remaining useful life, and the remainder to goodwill.
REQUIRED : Prepare a consolidated income statement for Pek Corporation and Subsidiary for the year ended December 31, 2013.