On January 1, 2023, French Company acquired 60 percent of K-Tech Company for $304,500 when K-Tech's book value was $404,500. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $203,000. 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 $23,000. In 2023, K-Tech reports $28,500 net income and declares no dividends. At the end of 2024, the two companies report the following figures (stockholders' equity accounts have been omitted): Trademarks Items Current assets Patented technology Liabilities Revenues Expenses French Company Carrying Amounts $ 623,000 263,000 413,000 (393,000) K-Tech Company Carrying Amounts $ 303,000 203,000 153,000 (123,000) (903,000) (403,000) Investment income 497,000 Not given 303,000 0 Note: Parentheses indicate a credit balance. ces Required: K-Tech Company Fair Values $ 323,000 283,000 176,000 (123,000) 0 0 0 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. 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
On January 1, 2023, French Company acquired 60 percent of K-Tech Company for $304,500 when K-Tech's book value was $404,500. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $203,000. 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 $23,000. In 2023, K-Tech reports $28,500 net income and declares no dividends. At the end of 2024, the two companies report the following figures (stockholders' equity accounts have been omitted): Trademarks Items Current assets Patented technology Liabilities Revenues Expenses French Company Carrying Amounts $ 623,000 263,000 413,000 (393,000) K-Tech Company Carrying Amounts $ 303,000 203,000 153,000 (123,000) (903,000) (403,000) Investment income 497,000 Not given 303,000 0 Note: Parentheses indicate a credit balance. ces Required: K-Tech Company Fair Values $ 323,000 283,000 176,000 (123,000) 0 0 0 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. 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
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, 2023, French Company acquired 60 percent of K-Tech Company for $304,500 when K-Tech's book value was
$404,500. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $203,000. 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 $23,000.
In 2023, K-Tech reports $28,500 net income and declares no dividends. At the end of 2024, the two companies report the following
figures (stockholders' equity accounts have been omitted):
Trademarks
Items
Current assets
Patented technology
Liabilities
Revenues
Expenses
French Company
Carrying Amounts
$ 623,000
263,000
413,000
(393,000)
K-Tech Company
Carrying
Amounts
$ 303,000
203,000
153,000
(123,000)
(903,000)
(403,000)
Investment income
497,000
Not given
303,000
0
Note: Parentheses indicate a credit balance.
ces
Required:
K-Tech Company
Fair Values
$ 323,000
283,000
176,000
(123,000)
0
0
0
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.
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
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