Preen Corporation Acquired a 60% Interest in Shino Corporation at a Cost

Essay

Preen Corporation acquired a 60% interest in Shino Corporation at a cost equal to 60% of the book value of Shino's net assets in 2010.At the time of acquisition, the book value and fair value of Shino's assets and liabilities were equal.During 2011, Preen sold $120,000 of merchandise to Shino.All intercompany sales are made at 150% of Preen's cost.Shino's beginning and ending inventories resulting from intercompany sales for 2011 were $60,000 and $36,000, respectively.Income statement information for both companies for 2011 is as follows:
Required:
Prepare a consolidated income statement for Preen Corporation and Subsidiary for 2011.