On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $300,000 when K-Tech's book value was $400,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $200,000. At the acquisition date, K-Tech's trademark (10-year remaining life) was undervalued in its financial records by $60,000. Also, patented technology (5-year remaining life) was undervalued by $40,000. In 2020, K-Tech reports $30,000 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 К-Теch Company Carrying Amounts К-Теch Company Fair Values Current $ 620,000 $ 300,000 $ 320,000 assets Trademarks Patented technology Liabilities Revenues Expenses Investment 260,000 200,000 280,000 410,000 150,000 190,000 (390,000) (900,000) 500, 000 (120,000) (400,000) 300,000 (120,000) Not given income Note: Parentheses indicate a credit balance. Vhat is the 2021 consolidated net income before allocation to the controlling and noncontrolling interests? Multiple Choice $500,000. $400,000. $491,600. O $486,000.

On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $300,000 when K-Tech's book value was $400,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $200,000. At the acquisition date, K-Tech's trademark (10-year remaining life) was undervalued in its financial records by $60,000. Also, patented technology (5-year remaining life) was undervalued by $40,000. In 2020, K-Tech reports $30,000 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 К-Теch Company Carrying Amounts К-Теch Company Fair Values Current $ 620,000 $ 300,000 $ 320,000 assets Trademarks Patented technology Liabilities Revenues Expenses Investment 260,000 200,000 280,000 410,000 150,000 190,000 (390,000) (900,000) 500, 000 (120,000) (400,000) 300,000 (120,000) Not given income Note: Parentheses indicate a credit balance. Vhat is the 2021 consolidated net income before allocation to the controlling and noncontrolling interests? Multiple Choice $500,000. $400,000. $491,600. O $486,000.

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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