On January 1,2014,Klode Corporation Acquired an 80% Interest in Savy

Essay

On January 1,2014,Klode Corporation acquired an 80% interest in Savy Company for $400,000 when Savy's stockholders' equity was $500,000; with Common stock $400,000 and Retained earnings $100,000.
On January 1,2014,Savy purchased a 10% interest in Klode for $50,000 when Klode's total stockholders' equity was $500,000; with Common stock $400,000 and Retained earnings $100,000.
The following data was available for the year ending December 31,2014:
$$\begin{array} { l l l } & \text { Klode Company } & \text { Savy Company } \\\text { Net income } & \$ 70,000 & \$ 50,000 \\\text { Dividends } & 0 & 0\end{array}$$ Use the conventional approach to account for the mutually-held stock.Assume there were no book value/fair value differentials for each investment.The separate net incomes do not include investment income.
Required:
1.Prepare the journal entry for Klode on January 1,2014.
2.Prepare the journal entry for Savy on January 1,2014.
3.Prepare the journal entry to record the constructive retirement of 10% of Klode's outstanding stock due to Savy's purchase of Klode's stock.
4.Determine the incomes of Klode and Savy on a consolidated basis with mutual income for 2014 using simultaneous equations.
5.What is controlling interest share of consolidated net income and noncontrolling interest shares for 2014?