Smith, Inc , has the following stockholders ' equity accounts as of January 1, 2013 Preferred stock $100 par, nonvoting and nonparticipating, 8 percent cumulative dividend $ 2,000,000 Common stock $20 par value 4,000,000 Retained earnings 10,000,000 Haried Company purchases all of Smith 's common s...

a The preferred shares are entitled to the specified cumulative dividend Thus the noncontrolling int ...

Smith, Inc., has the following stockholders' equity accounts as of January 1, 2013: Preferred stock-$100 par, nonvoting

Question:

Smith, Inc., has the following stockholders' equity accounts as of January 1, 2013:
Preferred stock-$100 par, nonvoting and
nonparticipating, 8 percent cumulative . . . . . . . . . . . . . $ 2,000,000
Common stock-$20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000,000
Haried Company purchases all of Smith's on January 1, 2013, for $14,040,000.
The preferred stock remains in the hands of outside parties. Any excess acquisition-date fair value will be assigned to franchise contracts with a 40-year life.
During 2013, Smith reports earning $450,000 in net income and pays $360,000 in cash dividends.
Haried applies the equity method to this investment.
a. What is the noncontrolling interest's share of consolidated net income for this period?
b. What is the balance in the Investment in Smith account as of December 31, 2013?
c. What consolidation entries are needed for 2013?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...