Question
Smith, Inc., has the following stockholders' equity accounts as of January 1, 2018: Preferred stock$125 par, nonvoting and nonparticipating, 5% cumulative dividend $ 2,050,000 Common
Smith, Inc., has the following stockholders' equity accounts as of January 1, 2018:
Preferred stock$125 par, nonvoting and nonparticipating, 5% cumulative dividend $ 2,050,000
Common stock$20 par value 4,050,000
Retained earnings 10,050,000
Haried Company purchases all of Smith's common stock on January 1, 2018, for $14,170,000. The preferred stock remains in the hands of outside parties. Any excess acquisition-date fair value will be assigned to franchise contracts with a 50-year remaining life.
During 2018, Smith reports earning $500,000 in net income and declares $410,000 in cash dividends. Haried applies the equity method to this investment.
- What is the noncontrolling interest's share of consolidated net income for this period?
- What is the balance in the Investment in Smith account as of December 31, 2018?
- What consolidation entries are needed for 2018?
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