On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $39,024. Calvin Co. has one recorded asset, a specialized production machine with a book value of $10,400 and no liabilities. The fair value of the machine is $51,400, and the remaining useful life is estimated to be 10 years. Any remaining excess fair value is attributable to an unrecorded process trade secret with an estimated future life of 4 years. Calvin’s total acquisition date fair value is $65,040.
At the end of the year, Calvin reports the following in its financial statements:
Revenues | $ | 65,250 | Machine | $ | 9,360 | Common stock | $ | 10,000 | |||
Expenses | 29,700 | Other assets | 31,190 | Retained earnings | 30,550 | ||||||
Net income | $ | 35,550 | Total assets | $ | 40,550 | Total equity | $ | 40,550 | |||
Dividends paid | $ | 5,000 | |||||||||
Determine the amounts that Beckman should report in its year-end consolidated financial statements for noncontrolling interest in subsidiary income, noncontrolling interest, Calvin’s machine (net of accumulated depreciation), and the process trade secret.
Fair Value of company | $65,040 | |||||||
Book Value | 10400 | |||||||
Fair Value in excess of book value | $54,640 | |||||||
Machine | 51400 | |||||||
Process trade secret | $3,240 | |||||||
Excess Depreciation | 5140 | |||||||
Excess Amortization to process trade per year | $810 | |||||||
Non Controlling interest in subsidiary income | ||||||||
40%*(65250-29700-5140-810) | 11840 | |||||||
End of Year non controlling interest | ||||||||
Beginning Balance (40%*65040) | 26016 | |||||||
Income Allocation | 11840 | |||||||
Dividend Reduction (40%*5000) | 2000 | |||||||
End of Year non controlling interest | 35856 | |||||||
Machine (net) | 55620 | (9360+51400-5140) | ||||||
Process Trade Secret | 2430 | (3240-810) | ||||||
Get Answers For Free
Most questions answered within 1 hours.