Reference no: EM132468321
On January 1, 2016, Hill Company acquired 80 percent of Smith Company's voting stock for $364,000. Smith reported a $320,000 book value and the fair value of the noncontrolling interest was $91,000 on that date. Then, on January 1, 2017, Smith acquired 80 percent of Linx Company for $108,000 when Linx had a $108,000 book value and the 20 percent noncontrolling interest was valued at $27,000. In each acquisition, the subsidiary's excess acquisition-date fair over book value was assigned to a trade name with a 30-year remaining life.
2016 2017 2018
Sales:
Hill Company $485,000 $767,500 $892,500
Smith Company $211,500 $386,000 $622,300
Linx Company Not available $263,700 $240,000
Expenses:
Hill Company $332,500 $525,000 $635,000
Smith Company $167,000 $315,000 $550,000
Linx Company Not available $244,000 $210,000
Dividends declared:
Hill Company $10,000 $45,000 $55,000
Smith Company $8,000 $18,000 $18,000
Linx Company Not available $2,000 $6,000
Question 1: If all companies use the equity method for internal reporting purposes, what is the December 31, 2017, balance in Hill's Investment in Smith Company account?
Question 1: What is the consolidated net income for this business combination for 2018?
Question 1: What is the net income attributable to the noncontrolling interest in 2018?
Assume that Birch made intra-entity inventory transfers to Aspen that have resulted in the following intra-entity gross profits in inventory at the end of each year:
Date Amount
12/31/16 $13,500
12/31/17 $16,200
12/31/18 $30,400
Question 1: What would be the accrual-based net income of Birch in 2017 and 2018?
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