Question
On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $309,000 when K-Techs book value was $409,000. The fair value of the
On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $309,000 when K-Techs book value was $409,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $206,000. At the acquisition date, K-Tech's trademark (20-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (10-year remaining life) was undervalued by $26,000.
In 2020, K-Tech reports $27,000 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 Amounts | K-Tech Company Fair Values | |||||||||
| Current assets | $ | 626,000 | $ | 306,000 | $ | 326,000 | |||||
| Trademarks | 266,000 | 206,000 | 286,000 | ||||||||
| Patented technology | 416,000 | 156,000 | 182,000 | ||||||||
| Liabilities | (396,000 | ) | (126,000 | ) | (126,000 | ) | |||||
| Revenues | (906,000 | ) | (406,000 | ) | |||||||
| Expenses | 494,000 | 306,000 | |||||||||
| Investment income | Not given | ||||||||||
What amount is reported for trademarks in the 2021 consolidated balance sheet?
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Essays On The Quality Of Audited Financial Statements
Authors: Ulf Mohrmann
1st Edition
3832541853, 978-3832541859
