On September 1, year 1, Phillips, Inc. issued common stock
in exchange for 20% of Sago, Inc.’s outstanding common stock.
On July 1, year 2, Phillips issued common stock for an additional
75% of Sago’s outstanding common stock. Sago continues in
existence as Phillips’ subsidiary. How much of Sago’s year 2 net
income should be reported as attributable to Phillips?