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 2014, 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?

Net income-noncontrolling interest's shares

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b.

What is the balance in the Investment in Smith account as of December 31, 2014?

Investment in Smith account

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c.

What consolidation entries are needed for 2014?

(1) Prepare entries S and A (combined)

Consolidating Entries	Debit	Credit
Common stock (Smith)
Franchises
Preferred stock (Smith)
Retained earnings (Smith)
Investment in Smith
Noncontrolling interest in Smith

(2) Prepare entry I

Consolidating Entries	Debit	Credit
Equity income of subsidiary
Investment in Smith

(3) Prepare entry D

Consolidating Entries	Debit	Credit
Investment in Smith
Dividends declared

(4) Prepare entry E

Consolidating Entries	Debit	Credit
Amortization expense
Franchises