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Problem 3 For the fiscal year ended December 31, 2018, Scala Company, the 90% owned subsidiary of Padua Corporation, had a net income of $120,000 and stockholder's equity of $600,000. During 2018, the following intercompany transactions and events occurred. 1. Padua sold merchandise to Scala for S180,000, representing a markup of 20% on Padua's cost. Merchandise acquired from Padua in Scala's inventories totaled $54,000 on December 31, 2017, and $84,000 on December 31, 2018 at billed prices. 2. On January 1, 2018 Scala sold to Padua for $80,000 a machine with a carrying amount to Scala of $56,000. Padua established a remaining life of eight years and the straight- line method of depreciation. 3. On July 1, 2018 Scala sold a parcel of land to Padua for $100,000. The land was on Scala's books at a cost of $85,000. Required: Determine the following A. Padua's investment income from Scala for the year ended December 31, 2018. B. Minority interest on the income statement for the year ended December 31, 2018. Minority interest on the balance sheet as of December 31, 2018. C. Problem 4 Comparative income statements of Sub for the calendar years 2017, 2018 and 2019 are as follows: 2017 2018 2019 Sales Cost of Sales Operating Expenses 3,000,000 3,750,000 4,300,000 2,100,000 2,350,000 2,800,000 300,000 600,000 650,000 Additional Information Sub was an 80%-owned subsidiary of Parent corporation throughout the 2017-2019 period. Parent's separate income (excluding income from Sub) was $1,700,000, . $2,100,000 and $2,800,000 in 2017, 2018 and 2019 respectively. Parent acquired its interest in Sub at its underlying book value, which was equal to fair value on July 1, 2016. Parent sold inventory items to Sub during 2017 at a gross profit to Parent of $240,000. One-third of the merchandise remained in Sub's inventory at December 31, 2017

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