home / study / business / accounting / accounting questions andanswers / on january 1, 2012, aspen company acquired 80 percent ofbirch company’s outstanding voting ... Question: On January 1,2012, Aspen Company acquired 80 percent of Birch Company’soutstanding voting stock... On January 1, 2012, Aspen Companyacquired 80 percent of Birch Company’s outstanding voting stock for$364,000. Birch reported a $320,000 book value and the fair valueof the noncontrolling interest was $91,000 on that date. Also, onJanuary 1, 2013, Birch acquired 80 percent of Cedar Company for$108,000 when Cedar had a $108,000 book value and the 20 percentnoncontrolling interest was valued at $27,000. In each acquisition,the subsidiary’s excess acquisition-date fair over book value wasassigned to a trade name with a 30-year life. These companiesreport the following financial information. Investment incomefigures are not included. 2012 2013 2014 Sales: Aspen Company $485,000 $ 767,500 $ 892,500 Birch Company 211,500 386,000 622,300Cedar Company Not available 263,700 240,000 Expenses: Aspen Company$ 332,500 $ 525,000 $ 635,000 Birch Company 167,000 315,000 550,000Cedar Company Not available 244,000 210,000 Dividends declared:Aspen Company $ 10,000 $ 45,000 $ 55,000 Birch Company 8,000 18,00018,000 Cedar Company Not available 2,000 6,000 Assume that each ofthe following questions is independent: . Assume that Birch madeintra-entity inventory transfers to Aspen that have resulted in thefollowing unrealized gross profits at the end of each year: DateAmount 12/31/12 $13,500 12/31/13 16,200 12/31/14 30,400 What is therealized income of Birch in 2013 and 2014, respectively?