Reference no: EM132418776

Problem: Clark, Inc., has the following stockholders' equity accounts as of January 1, 2018:

Preferred stock-$150 par, nonvoting and

nonparticipating, 7% cumulative dividend $2,130,000

Common stock-$25 par value  $4,130,000

Retained earnings  $10,130,000

Hampshire Company purchases all of Clark's common stock on January 1, 2018, for $14,320,000. The preferred stock remains in the hands of outside parties. Any excess acquisition-date fair value will be assigned to franchise contracts with a 40-year remaining life.

During 2018, Clark reports earning $580,000 in net income and declares $490,000 in cash dividends. Hampshire applies the equity method to this investment.

Required:

Question 1: What is the noncontrolling interest's share of consolidated net income for this period?

Question 2: What is the balance in the Investment in Clark account as of December 31, 2018?

Question 3: What consolidation entries are needed for 2018?