On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $330,000 when K-Tech's book value was $430,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $220,000. 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 $40,000. In 2020, K-Tech reports $20,000 net income and declares no dividends. At the end of 2021, the two companies report the following figures (stockholders' equity accounts have been omitted): Current assets Trademarks Patented technology Liabilities Revenues Expenses Investment income Multiple Choice $540,000. Note: Parentheses indicate a credit balance. $532,000. French Company Carrying Amounts O $535,200. $ 640,000 280,000 430,000 (410,000) (920,000) 480,000 Not given O $440,000. K-Tech Company Carrying Amounts $ 320,000 220,000 170,000 What is the 2021 consolidated net income before allocation to the controlling and noncontrolling interests? (140,000) (420,000) 320,000 K-Tech Company Fair Values $ 340,000 300,000 210,000 (140,000)

On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $330,000 when K-Tech's book value was $430,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $220,000. 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 $40,000. In 2020, K-Tech reports $20,000 net income and declares no dividends. At the end of 2021, the two companies report the following figures (stockholders' equity accounts have been omitted): Current assets Trademarks Patented technology Liabilities Revenues Expenses Investment income Multiple Choice $540,000. Note: Parentheses indicate a credit balance. $532,000. French Company Carrying Amounts O $535,200. $ 640,000 280,000 430,000 (410,000) (920,000) 480,000 Not given O $440,000. K-Tech Company Carrying Amounts $ 320,000 220,000 170,000 What is the 2021 consolidated net income before allocation to the controlling and noncontrolling interests? (140,000) (420,000) 320,000 K-Tech Company Fair Values $ 340,000 300,000 210,000 (140,000)

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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