Question
Use the following information to answer questions 14-16 West Company acquired 60 percent of Solar Company for $304,500 when Solars book value was $404,500. The
Use the following information to answer questions 14-16
West Company acquired 60 percent of Solar Company for $304,500 when Solars book value was $404,500. The newly comprised 40 percent noncontrolling interest had an assessed fair value of $203,000. Also at the acquisition date, Solar had a trademark (with a 20-year life) that was undervalued in the financial records by $63,000. Also, patented technology (with a 10-year life) was undervalued by $43,000. Two years later, the following figures are reported by these two companies (stockholders equity accounts have been omitted):
West Company Book Value | Solar Company Book Value | Solar Company Fair Value | |||||||||
Current assets | $ | 623,000 | $ | 303,000 | $ | 323,000 | |||||
Trademarks | 263,000 | 203,000 | 283,000 | ||||||||
Patented technology | 413,000 | 153,000 | 153,000 | ||||||||
Liabilities | (393,000 | ) | (123,000 | ) | (123,000 | ) | |||||
Revenues | (903,000 | ) | (403,000 | ) | |||||||
Expenses | 497,000 | 303,000 | |||||||||
Investment income | Not given | ||||||||||
Problem 4-14 (LO 4-2)
What is the consolidated net income before allocation to the controlling and noncontrolling interests?
Multiple Choice
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$506,000.
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$498,550.
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$406,000.
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$501,530.
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