Question
In: Accounting
Smith, Inc., has the following stockholders’ equity accounts as of January 1, 2018: Preferred stock—$100 par,...
Smith, Inc., has the following stockholders’ equity accounts as of January 1, 2018:
| Preferred stock—$100 par, nonvoting and nonparticipating, 8% cumulative dividend | $ | 2,000,000 |
| Common stock—$20 par value | 4,000,000 | |
| Retained earnings | 10,000,000 | |
Haried Company purchases all of Smith's common stock on January 1, 2018, for $14,040,000. 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, Smith reports earning $450,000 in net income and declares $360,000 in cash dividends. Haried applies the equity method to this investment.
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, 2018?
What consolidation entries are needed for 2018?
a. What is the noncontrolling interest's share of consolidated net income for this period?
b. What is the balance in the Investment in Smith account as of December 31, 2018?
|
Prepare Entry S and A to eliminate the subsidiary stockholders' equity, record excess fair values, and to record the outside ownership of the subsidiary's preferred stock at fair value.
Note: Enter debits before credits.
| Preferred stock (Smith) |
|
+
Prepare Entry I to eliminate the equity accrual made in connection with common stock along with the excess amortization recorded by the parent.
Note: Enter debits before credits.
|
+
Prepare Entry D to remove the intra-entity dividend declarations made on common stock.
.
Note: Enter debits before credits.
|
+
Prepare Entry E to recognize the amortization of franchises for the current year.
Note: Enter debits before credits.
|
+
Solutions
ekkarill92 answered 1 year agoRelated Solutions
Smith, Inc., has the following stockholders’ equity accounts as of January 1, 2018: Preferred stock—$100 par,...
Smith, Inc., has the following stockholders’ equity accounts as
of January 1, 2018:
Preferred stock—$100
par, nonvoting and nonparticipating, 6% cumulative dividend
$
2,230,000
Common stock—$20 par value
4,230,000
Retained earnings
10,230,000
Haried Company purchases all of Smith's common stock on January
1, 2018, for $14,520,000. 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, Smith reports earning $680,000 in net...
The stockholders’ equity accounts of Tamarisk, Inc. on January 1, 2019, were as follows. Preferred Stock...
The stockholders’ equity accounts of Tamarisk, Inc. on January
1, 2019, were as follows.
Preferred Stock (8%, $52 par, cumulative, 10,000 shares
authorized)
$ 390,000
Common Stock ($1 stated value, 2,000,000 shares
authorized)
1,300,000
Paid-in Capital in Excess of Par—Preferred Stock
105,000
Paid-in Capital in Excess of Stated Value—Common Stock
1,500,000
Retained Earnings
1,800,000
Treasury Stock (11,000 common shares)
44,000
During 2019, the corporation had the following transactions and
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1
Issued 24,000 shares of...
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The stockholders’ equity accounts of Bramble Corp. on January 1,
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4,500 shares authorized) $270,000 Common Stock ($4 stated value,
270,000 shares authorized) 900,000 Paid-in Capital in Excess of Par
Value—Preferred Stock 13,500 Paid-in Capital in Excess of Stated
Value—Common Stock 432,000 Retained Earnings 619,200 Treasury Stock
(4,500 common shares) 36,000 During 2022, the corporation had the
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The stockholders’ equity accounts of Ayayai Corp. on January 1, 2017, were as follows. Preferred Stock...
The stockholders’ equity accounts of Ayayai Corp. on January 1,
2017, were as follows.
Preferred Stock ( 7%, $ 100 par noncumulative, 4,200
shares authorized)
$ 252,000
Common Stock ($ 3 stated value, 336,000 shares
authorized)
840,000
Paid-in Capital in Excess of Par Value—Preferred Stock
12,600
Paid-in Capital in Excess of Stated Value—Common Stock
537,600
Retained Earnings
691,500
Treasury Stock ( 4,200 common shares)
33,600
During 2017, the corporation had the following transactions and
events pertaining to its stockholders’ equity.
Feb.
1...
The stockholders’ equity accounts of Swifty Corporation on January 1, 2022, were as follows. Preferred Stock...
The stockholders’ equity accounts of Swifty Corporation on
January 1, 2022, were as follows.
Preferred Stock (7%, $100 par noncumulative, 11,000 shares
authorized)
$660,000
Common Stock ($4 stated value, 660,000 shares authorized)
2,200,000
Paid-in Capital in Excess of Par Value—Preferred Stock
33,000
Paid-in Capital in Excess of Stated Value—Common Stock
1,056,000
Retained Earnings
1,513,600
Treasury Stock (11,000 common shares)
88,000
During 2022, the corporation had the following transactions and
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The stockholders’ equity accounts of Concord Corporation on January 1, 2020, were as follows. Preferred Stock...
The stockholders’ equity accounts of Concord Corporation on
January 1, 2020, were as follows.
Preferred Stock (8%, $48 par, 11,000 shares authorized)
$ 360,000
Common Stock ($1 stated value, 2,100,000 shares
authorized)
1,300,000
Paid-in Capital in Excess of Par—Preferred Stock
150,000
Paid-in Capital in Excess of Stated Value—Common Stock
1,450,000
Retained Earnings
1,850,000
Treasury Stock (10,500 common shares)
52,500
During 2020, the corporation had the following transactions and
events pertaining to its stockholders’ equity.
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The stockholders’ equity accounts of Sheffield Corp. on January 1, 2022, were as follows. Preferred Stock...
The stockholders’ equity accounts of Sheffield Corp. on January
1, 2022, were as follows.
Preferred Stock (8%, $100 par noncumulative, 5,000 shares
authorized)
$450,000
Common Stock ($10 stated value, 800,000 shares authorized)
1,550,000
Paid-in Capital in Excess of Par Value—Preferred Stock
67,000
Paid-in Capital in Excess of Stated Value —Common Stock
800,000
Retained Earnings
810,000
Treasury Stock (8,400 common shares)
67,200
During 2022, the corporation had the following transactions and
events pertaining to its stockholders’ equity.
Mar
1
Issued 6,000...
The stockholders equity accounts of Warden Corporation on January 1, 2014, were as follows. Preferred stock...
The stockholders equity accounts of Warden Corporation on
January 1, 2014, were as follows.
Preferred stock (9%, $50 par cumulative, 10000 shares
authorized) $200000
Common stock ($1 stated value, 2000000 shares authorized)
100000
Paid-in capital in Excess of Par value-Preferred stock
$16000
Paid in Capital in Excess of Stated Value-Common stock
$1400000
Retained Earnings $1716000
Treasury Stock (8000 common shares) $20000
During 2014 the corporation had these transactions and events
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The stockholders’ equity accounts of Riverbed Corp on January 1, 2022, were as follows. Preferred Stock...
The stockholders’ equity accounts of Riverbed Corp on January 1,
2022, were as follows.
Preferred Stock (7%, $100 par noncumulative, 15,000 shares
authorized)
$900,000
Common Stock ($4 stated value, 900,000 shares authorized)
3,000,000
Paid-in Capital in Excess of Par Value—Preferred Stock
45,000
Paid-in Capital in Excess of Stated Value—Common Stock
1,440,000
Retained Earnings
2,064,000
Treasury Stock (15,000 common shares)
120,000
During 2022, the corporation had the following transactions and
events pertaining to its stockholders’ equity.
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Issued 15,000 shares...
The stockholders’ equity accounts of Wildhorse Co. on January 1, 2022, were as follows. Preferred Stock...
The stockholders’ equity accounts of Wildhorse Co. on January 1,
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Preferred Stock (9%, $100 par noncumulative, 5,000 shares
authorized)
$350,000
Common Stock ($10 stated value, 800,000 shares authorized)
1,410,000
Paid-in Capital in Excess of Par Value—Preferred Stock
50,000
Paid-in Capital in Excess of Stated Value —Common Stock
890,000
Retained Earnings
790,000
Treasury Stock (7,400 common shares)
59,200
During 2022, the corporation had the following transactions and
events pertaining to its stockholders’ equity.
Mar
1
Issued 6,600...
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