Essay
On January 1,2014,Paisley Incorporated paid $300,000 for 60% of Smarnia Company's outstanding capital stock.Smarnia reported common stock on that date of $250,000 and retained earnings of $100,000.Plant assets,which had a five-year remaining life,were undervalued in Smarnia's financial records by $10,000.Smarnia also had a patent that was not on the books,but had a market value of $60,000.The patent has a remaining useful life of 10 years.Any remaining fair value/book value differential is allocated to goodwill.Smarnia's net income and dividends paid the first three years that Paisley owned them are shown below. 
Requirement 1: Calculate the noncontrolling interest share in Smarnia's income for each of the three years.
Requirement 2: Calculate the noncontrolling interest that should be reported on the consolidated balance sheet at the end of each of the three years.
Requirement 3: Assuming that Paisley uses the equity method to record their investment in Smarnia,calculate the ending balance in the Investment in Smarnia account for each of the three years.
Correct Answer:
Verified
Correct Answer:
Verified
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