On January 1, 2014, Paterson Company purchased 70% of the common stock of Smith Company for...

On January 1, 2014, Paterson Company purchased 70% of the common stock of Smith Company for $420,000. At that time, Smith’s stockholders’ equity consisted of $80,000 of Common stock, $60,000 of Other contributed capital, and $240,000 of Retained earnings. Any difference between implied and book value relates to Smith’s land. Paterson uses the cost method to record its investment in Smith. Its fiscal year ends on December 31. Additional information for both companies for 2020 follows:

	Paterson	Smith
Common stock	300,000	80,000
Other contributed capital	120,000	60,000
Retained earnings, 1/1/2020	240,000	240,000
Net income for 2020	262,000	164,000
Dividends declared in 2020	40,000	16,000

Required:

A)Prepare all the necessary eliminating entries on a consolidated statements workpaper on 12/31/2020.

B) Calculate the consolidated net income for 2020.

C) Calculate the non controlling interest in net income for 2020.

Solutions

Expert Solution

ekkarill92 answered 10 months ago

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