Hepner Corporation has the following stockholders’ equity accounts:

Preferred stock (6% cumulative dividend)	$500,000
Common stock	750,000
Additional paid-in capital	300,000
Retained earnings	950,000

The preferred stock is participating. Wasatch Corporation buys 80 percent of this common stock for $1,600,000 and 70 percent of the preferred stock for $630,000. The acquisition-date fair value of the noncontrolling interest in the common shares was $400,000 and was $270,000 for the preferred shares. All of the subsidiary’s assets and liabilities are viewed as having fair values equal to their book values. What amount is attributed to goodwill on the date of acquisition?

Smith, Inc., has the following stockholders’ equity accounts as of January 1, 2011:

Preferred stock—$100 par, nonvoting and
nonparticipating, 8 percent cumulative dividend	$ 2,000,000
Common stock—$20 par value	4,000,000
Retained earnings	10,000,000

Haried Company purchases all of Smith’s common stock on January 1, 2011, for $14,040,000. The preferred stock remains in the hands of outside parties. Any excess acquisition-date fair value will be assigned to franchise contracts with a 40-year life.

During 2011, Smith reports earning $450,000 in net income and pays $360,000 in cash dividends. Haried applies the equity method to this investment.

a. What is the noncontrolling interest’s share of consolidated net income for this period?

b. What is the balance in the Investment in Smith account as of December 31, 2011?

c. What consolidation entries are needed for 2011?