Smith Corporation acquired 80 percent ofthe outstanding voting stock ofKane, Inc., on January 1, 2009, when Kane had a net book value of $400,000. Any excess fair value was assigned to intangi¬ ble assets and amortized at a rate of $5,000 per year.

 LO8 Reported net income for 2010 was $300,000 for Smith and $110,000 for Kane. Smith distributed $100,000 in dividends during this period; Kane paid $40,000. At year-end, selected figures from the two companies’ balance sheets were as follows:
Smith Corporation Kane, Inc.
Inventory.
. $140,000 $ 90,000 Land.
. 600,000 200,000 Equipment(net).
. 400,000 300,000 Common,stock.
. 400,000 200,000 Retained earnings, 12/31/10.
. 600,000 400,000 During 2009, intercompany sales of $90,000 (original cost of $54,000) were made. Only 20 percent of this inventory was still held at the end of 2009. In 2010, $120,000 in intercompany sales were made with an original cost of $66,000. Ofthis merchandise, 30 percent had not been resold to outside parties by the end of the year.
Each ofthe following questions should he considered as an independent situation.

a. If the intercompany sales were upstream, what is the noncontrolling interest’s share of the subsidiary’s 2010 net income?

b. What is the consolidated balance in the ending Inventory account?

c. If the intercompany sales were downstream, what is the noncontrolling interest’s share of the subsidiary’s 2010 net income?

d. If the intercompany sales were downstream, what is the consolidated net income? Assume that Smith uses the initial value method to account for this investment.

e. If the intercompany sales were downstream, what is the consolidated balance of the Retained Earnings account as of the end of 2010? Assume that Smith uses the partial equity method to account for this investment.
f If the intercompany sales were upstream, what is the consolidated balance for Retained Earnings as of the end of 2010? Assume that Smith uses the partial equity method to account for this investment.
g. Assume that no intercompany inventory sales occurred between Smith and Kane. Instead, in 2009, Kane sold land costing $30,000 to Smith for $50,000. On the 2010 consolidated balance sheet, what value should be reported for land?
h. Assume that no intercompany inventory or land sales occurred between Smith and Kane. Instead, on January 1, 2009, Kane sold equipment (that originally cost $100,000 but had a $60,000 book value on that date) to Smith for $80,000. At the time of sale, the equipment had a remaining useful life of five years. What worksheet entries are made for a December 31, 2010, consolidation of these two companies to eliminate the impact of the intercompany transfer? For 2010, what is the noncontrolling interest’s share of Kane’s net income?