On January 1, 2023, French Company acquired 60 percent of K-Tech Company for $331,500 when K-Tech's book value was $431,500.The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $221,000. At the acquisition date, K-Tech'strademark (10-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (5-year remaininglife) was undervalued by $41,000.In 2023, K-Tech reports $19,500 net income and declares no dividends. At the end of 2024, the two companies report the followingfigures (stockholders' equity accounts have been omitted):ItemsCurrent assetsTrademarksPatented technologyLiabilitiesRevenuesExpensesInvestment income.French CompanyCarrying Amounts$ 641,000281,000431,000(411,000)(921,000)479,000Not givenNote: Parentheses indicate a credit balance.K-Tech CompanyCarrying Amounts$ 321,000221,000171,000(141,000)(421,000)321,0000a. Consolidated net incomeb(1). Noncontrolling interest's share of the subsidiary's incomeb(2). Noncontrolling interest at end of 2024c. Consolidated trademarksK-Tech CompanyFair Values$ 341,000301,000212,000(141,000)080Required:a. Compute the 2024 consolidated net income before allocation to the controlling and noncontrolling interests.b. In 2024, assuming K-Tech has declared no dividends, compute the noncontrolling interest's share of the subsidiary's income andthe ending balance of the noncontrolling interest in the subsidiary.c. Compute the amount reported for trademarks in the 2024 consolidated balance sheet.

Consolidation is a financial reporting process used to combine the financial statements of parent…

Answered: a. Consolidated net income b(1).…

a. Consolidated net income b(1). Noncontrolling interest's share of the subsidiary's income b(2). Noncontrolling interest at end of 2024 c. Consolidated trademarks

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

On January 1, 2023, French Company acquired 60 percent of K-Tech Company for $331,500 when K-Tech's book value was $431,500.
The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $221,000. At the acquisition date, K-Tech's
trademark (10-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (5-year remaining
life) was undervalued by $41,000.
In 2023, K-Tech reports $19,500 net income and declares no dividends. At the end of 2024, the two companies report the following
figures (stockholders' equity accounts have been omitted):
Items
Current assets
Trademarks
Patented technology
Liabilities
Revenues
Expenses
Investment income.
French Company
Carrying Amounts
$ 641,000
281,000
431,000
(411,000)
(921,000)
479,000
Not given
Note: Parentheses indicate a credit balance.
K-Tech Company
Carrying Amounts
$ 321,000
221,000
171,000
(141,000)
(421,000)
321,000
0
a. Consolidated net income
b(1). Noncontrolling interest's share of the subsidiary's income
b(2). Noncontrolling interest at end of 2024
c. Consolidated trademarks
K-Tech Company
Fair Values
$ 341,000
301,000
212,000
(141,000)
0
8
0
Required:
a. Compute the 2024 consolidated net income before allocation to the controlling and noncontrolling interests.
b. In 2024, assuming K-Tech has declared no dividends, compute the noncontrolling interest's share of the subsidiary's income and
the ending balance of the noncontrolling interest in the subsidiary.
c. Compute the amount reported for trademarks in the 2024 consolidated balance sheet.

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