Investment recording methods. Solara Corporation is considering investing in Focus Corporation, but is unsure about what level of ownership should be undertaken. Solara and Focus have the following reported incomes:
|
Solara |
Focus |
|
|
Sales |
$640,000 |
$370,000 |
|
Cost of goods sold |
300,000 |
230,000 |
|
Gross profit |
$340,000 |
$140,000 |
|
Selling and administrative expenses |
120,000 |
75,000 |
|
Net income |
$220,000 |
$65,000 |
Focus paid $15,000 in cash dividends to its investors. Prepare a pro forma income statement for Solara Corporation that compares income under 10%, 20%, and 70% ownership levels.