Question
On January 1, 2020, French Company acquired 60% of K-Tech Company for $334,500 when K-Techs book value was $434,500. The fair value of the newly
On January 1, 2020, French Company acquired 60% of K-Tech Company for $334,500 when K-Techs book
value was $434,500. The fair value of the newly comprised 40% noncontrolling interest was assessed at
$223,000. At the acquisition date, K-Techs trademark (20-year remaining life) was undervalued in its financial
records by $80,000. Also, patented technology (10-year remaining life) was undervalued by $43,000.
In 2020, K-Tech reports $18,500 net income and declares no dividends. At the end of 2021, the two
companies report the following figures (stockholders equity accounts have been omitted):
| French Company Carrying Amounts | K-Tech Company Carrying Ammounts | K-Tech Company Fair Value |
Current assets | $ 643,000 | $ 323,000 | $ 343,000 |
Trademarks | 283,000 | 223,000 | 303,000 |
Patented technology | 433,000 | 173,000 | 216,000 |
Liabilities | (413,000) | (143,000) | (143,000) |
Revenues | (923,000) | (423,000) |
|
Expenses | 477,000 | 323,000 |
|
Investment income | Not Given |
|
|
1. What is the 2021 consolidated net income before allocation to the controlling and noncontrolling interest? 2. In 2021, assuming K-Tech has declared no dividends, what are the noncontrolling interests share of the subsidiarys income and the ending balance of the noncontrolling interest in the subsidiary?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started