On January 1 2013 Price Company acquired an 80 interest

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On January 1, 2013, 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, 2014,
Price Company purchased new equipment for $14,500 from Smith Company. The equipment
cost $9,000 and had an estimated life of five years as of January 1, 2014.During 2015, 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, 2015. At the
beginning of 2015, Smith Company had in inventory $25,000 of merchandise purchased in the
previous period from Price Company.Required:A. Prepare all work paper entries necessary to
eliminate the effects of the intercompany sales on the consolidated financial statements for the
year ended December 31, 2015.B. Assume that Smith Company reports net income of $40,000
for the year ended December 31, 2015. Calculate the amount of non controlling interest to be
deducted from consolidated income in the consolidated income statement for the year ended
December 31, 2015.View Solution:
On January 1 2013 Price Company acquired an 80 interest

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