Question
West Company acquired 60 percent of Solar Company for $315,000 when Solars book value was $415,000. The newly comprised 40 percent noncontrolling interest had an
West Company acquired 60 percent of Solar Company for $315,000 when Solars book value was $415,000. The newly comprised 40 percent noncontrolling interest had an assessed fair value of $210,000. Also at the acquisition date, Solar had a trademark (with a 10-year life) that was undervalued in the financial records by $70,000. Also, patented technology (with a 5-year life) was undervalued by $50,000. 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 | $ | 630,000 | $ | 310,000 | $ | 330,000 | |||||
| Trademarks | 270,000 | 210,000 | 290,000 | ||||||||
| Patented technology | 420,000 | 160,000 | 160,000 | ||||||||
| Liabilities | (400,000 | ) | (130,000 | ) | (130,000 | ) | |||||
| Revenues | (910,000 | ) | (410,000 | ) | |||||||
| Expenses | 490,000 | 310,000 | |||||||||
| Investment income | Not given | ||||||||||
|
What is the consolidated net income before allocation to the controlling and noncontrolling interests? | |||||||||||
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