On January 1, 2010, Price Company acquired an 80% interest in the common stock of Smith Company on the open


On January 1, 2010, Price Company acquired an 80% interest in the common stock of Smith Company on the open market for $750,000, the book value at that date. On January 1, 2011, Price Company purchased new equipment for $14,500 Smith Company. The equipment cost $9,000 and had an estimated life of five years as of January 1, 2011. During 2012, Price Company had merchandise sales to Smith Company of $100,000; the merchandise was priced at 25% above Price Company’s cost. Smith Company still owes Price Company $17,500 on open account and has 20% of this merchandise in inventory at December 31, 2012. At the beginning of 2012, Smith Company had in inventory $25,000 of merchandise purchased in the previous period from Price Company.


A. Prepare all workpaper entries necessary to eliminate the effects of the intercompany sales on the consolidated financial statements for the year ended December 31, 2012.

B. Assume that Smith Company reports net income of $40,000 for the year ended December 31, 2012. Calculate the amount of noncontrolling interest to be deducted from consolidated income in the consolidated income statement for the year ended December 31, 2012.

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
Consolidated Income Statement
When talking about the group financial statements the consolidated financial statements include Consolidated Income Statement that a parent must prepare among other sets of consolidated financial statements. Consolidated Income statement that is...

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Advanced Accounting

ISBN: 978-1118098615

5th Edition

Authors: Debra C. Jeter, Paul Chaney

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Question Posted: March 13, 2015 12:04:00