On January 1, 2018, Smith Co. acquired 70% of Anderson Inc. by paying $650,000. This included a $20,000 control premium. Anderson reported common stock on that date of $420,000 with retained earnings of $252,000. A building was overvalued in the companys financial records by $28,000. This building had a ten-year remaining life. Copyrights of $80,000 were to be recognized and amortized over 20 years. Anderson earned income and paid cash dividends as follows:

On December 31, 2020, Smith owed $30,800 to Anderson. There have been no changes in Runyans common stock account since the acquisition.

1. On the acquisition date, what would be the balance in the noncontrolling interest on the consolidated balance sheet? Answer

2. What was Smiths equity income for the year ended December 31, 2019? Answer

3. What is the noncontrolling interest balance as of December 31, 2020 assuming that the acquisition date balance was $300,000? Answer (do you account for AAP for the $30800 owed at the end of 2020? Or do you not include it because its the last day or because its intercompany? Would appreciate if someone explained this)

4. What is Smith's pre-consolidation Equity Investment balance as of December 31, 2019? Answer

5. Suppose that Smith applies the equity method for its investments in subsidiaries and reports 2018 pre-consolidation net income of $600,000. What is consolidation net income for 2018? Answer

2018 2019 2020 Net income Dividends paid $105,000 $54,600 134,400 61,600 154,000 84,000 2018 2019 2020 Net income Dividends paid $105,000 $54,600 134,400 61,600 154,000 84,000