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What consolidation entries are needed for 2021

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Reference no: EM133527627

Case Study: Smith, Inc., has the following stockholders' equity accounts as of January 1, 2021:

Preferred stock-$100 par, nonvoting and nonparticipating, 6% cumulative dividend$2,250,000Common stock-$20 par value 4,250,000 Retained earnings 10,250,000

Haried Company purchases all of Smith's common stock on January 1, 2021, for $14,550,000. 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 2021, Smith reports earning $700,000 in net income and declares $610,000 in cash dividends. Haried applies the equity method to this investment.

Questions:

  • 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, 2021?
  • What consolidation entries are needed for 2021?

 

Reference no: EM133527627

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