Answer:
a) Consolidated Net Income
When preparing consolidated Net Income, We add each and every line item on a Parent's financial statements with the same line item on the Subsidiary's financial statement and adjust line items like revenue ( intra-group sale) , cost of goods sold ( unrealized profits) , other incomes ( dividends received) and expenses (depreciation on profits) .
b) JOURNAL ENTRIES
Debit Common stock $ 280,000 Debit Retained Earnings $ 95,000 Credit investment $ 300,000 Credit Non_Controlling interest( N . C . I ) $ 75,000
c) Debit Service Revenue $ 21,000,Credit Service fee $ 21,000
Debit Gain or profits on sale of land $ 25,000 Credit Land $ 25,000
Debit Dividends received $ 8000, N . C . I $2000 Credit Dividends paid $ 10,000
Explanation:
The question is incomplete, it lacks the financial statements to be consolidated.
Steps to Consolidated Statements
1 . Eliminate common transactions ( transactions like intra-group sale , dividends , etc . .)
2 . Consolidate the financial statements
b) we credit investment and if investment is greater than the total of common stock and retained earnings at 80% then we create equity represented by goodwill ( asset ) , if investment is less the we set off that amount in the retained earnings of the investing company. (Assuming investment = 80 % of total amount at acquisition .
