Parrot Company Purchased 75% of the Outstanding Common Shares and 50

Essay

Parrot Company purchased 75% of the outstanding common shares and 50% of the outstanding preference shares of Saltines Inc. on January 1, 2020, on which date the balance sheet and fair values of Saltines' assets and liabilities were as follows:
Saltines Inc.
Balance Sheet
as at December 31, 2019
$\begin{array}{|l|r|r|}\hline & \text { Book Values } & \text { Fair Values } \\\hline \text { Cash } & \$ 130,000 & \$ 130,000 \\\hline \text { Accounts receivable } & 120,000 & 110,000 \\\hline \text { Inventory } & 320,000 & 290,000 \\\hline \text { Capital assets (net) } & 720,000 & 800,000 \\\hline & \$ 1,290,000 & \\\hline \text { Current liabilities } & \$ 190,000 & \$ 190,000 \\\hline \text { Long-term debt } & 300,000 & 300,000 \\\hline \text { Common shares } & 300,000 \\\hline \text { Preferred shares } & 200,000 \\\hline \text { Contributed surplus } & 50,000 \\\hline \text { Retained earnings } & 250,000 \\\hline & \$ 1,290,000 \\\hline\end{array}$ Parrot paid $460,000 for the common shares and $105,000 for the preference shares. The contributed surplus arose from the issue of the preferred shares at a price higher than their stated value. The preferred shares paid cumulative dividends of 5% of their stated value but dividends for 2018 and 2019 were unpaid. The shares were redeemable, at the option of the issuer, at a premium of 8%.
The capital assets of Saltines had a remaining useful life of ten years at January 1, 2010. Any unallocated acquisition differential would be treated as goodwill, which is assessed annually for impairment. Parrot accounts for its interest in Saltines using the cost method and accounts for the non-controlling interest in its consolidated financial statements using the fair value enterprise method.
Parrot's net income for 2020 was $300,000 and Parrot paid dividends of $150,000 on December 31, 2020. Saltines' net income for 2020 was $120,000 before a loss from discontinued operations of $60,000 (net of tax). Saltines paid dividends of $75,000 in 2020. (Parrot included all dividends received in its income for 2020.)
Calculate the consolidated net income of Parrot and its subsidiary as at December 31, 2020.