Question
Smith, Inc., has the following stockholders equity accounts as of January 1, 2014: Preferred stock$100 par, nonvoting and nonparticipating, 8 percent cumulative dividend $ 2,200,000
Smith, Inc., has the following stockholders equity accounts as of January 1, 2014: |
Preferred stock$100 par, nonvoting and nonparticipating, 8 percent cumulative dividend | $ | 2,200,000 |
Common stock$20 par value | 4,200,000 | |
Retained earnings | 10,200,000 | |
Haried Company purchases all of Smiths common stock on January 1, 2014, for $14,430,000. The preferred stock remains in the hands of outside parties. Any excess acquisition-date fair value will be assigned to franchise contracts with a 30-year remaining life. |
During 2013, Smith reports earning $650,000 in net income and declares $560,000 in cash dividends. Haried applies the equity method to this investment. |
a. | What is the noncontrolling interests share of consolidated net income for this period? |
b. | What is the balance in the Investment in Smith account as of December 31, 2014? |
c. | What consolidation entries are needed for 2014? (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) |
TransactionConsolidating EntriesDebitCredit
(1) Prepare entries S and A (combined)
(2) Prepare entry I
(3) Prepare entry D
(4) Prepare entry E4
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