On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $48,960. Calvin Co. has one recorded asset, a specialized production machine with a book value of $19,900 and no liabilities. The fair value of the machine is $68,400, 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 $81,600.
At the end of the year, Calvin reports the following in its financial statements:
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.
|Noncontrolling Interest in subsidiary income|
|Total noncontrolling interest|
|Calvin's machine (net accumulated depreciation)|
|Process trade secret|
|Fair Value of the company||81600|
|Fair Value in excess of Book value||61700|
|To process trade secret||13200|
|Excess depreciation to machine per year (48500/10)||4850|
|Excess amortization to process trade secret per year(13200/4)||3300|
|Non controlling interest in subsidiary income|
|End of year noncontrolling interest|
|End of year noncontrolling interest||41780|
|Machine(net) = (17910+48500-4850)||61560|
|Process trade secret(13200-3300)||9900|
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