EXERCISE 4-5Eliminating Entries, Non-controlling InterestLO2

On January 1, 2014, Plate Company purchased a 90% interest in the common stock of Set Company for $650,000, an amount $20,000 in excess of the book value of equity acquired. The excess relates to the understatement of Set Company's land holdings.

Excerpts from the consolidated retained earnings section of the consolidated statements workpaper for the year ended December 31, 2014, follow:

	Set Company	Consolidated Balances
1/1/14 retained earnings	190,000	880,000
Net income from above	132,000	420,000
Dividends declared	(50,000)	(88,000)
12/31/14 retained earnings to the balance sheet	272,000	1,212,000

Set Company's stockholders' equity is composed of common stock and retained earnings only.

Required:

1. 1.Prepare the eliminating entries required for the preparation of a consolidated statements workpaper on December 31, 2014, assuming the use of the cost method.
2. 2.Prepare the eliminating entries required for the preparation of a consolidated statements workpaper on December 31, 2014, assuming the use of the equity method.
3. 3.Determine the total non-controlling interest that will be reported on the consolidated balance sheet on December 31, 2014. How does the non-controlling interest differ between the cost method and the equity method?