On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $66,312. Calvin Co. has one recorded asset, a specialized production machine with a book value of $14,000 and no liabilities. The fair value of the machine is $100,000, and the remaining useful life is estimated to be 10 years. Any remaining excess fair value is attributable to an unrecorded process trade secret with an estimated future life of 4 years. Calvin’s total acquisition date fair value is $110,520. At the end of the year, Calvin reports the following in its financial statements: Revenues $ 57,750 Machine $ 12,600 Common stock $ 14,000 Expenses 24,150 Other assets 30,000 Retained earnings 28,600 Net income $ 33,600 Total assets $ 42,600 Total equity $ 42,600 Dividends paid $ 5,000 Determine the amounts that Beckman should report in its year-end consolidated financial statements for noncontrolling interest in subsidiary income, noncontrolling interest, Calvin’s machine (net of accumulated depreciation), and the process trade secret.
On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $66,312. Calvin Co. has one recorded asset, a specialized production machine with a book value of $14,000 and no liabilities. The fair value of the machine is $100,000, and the remaining useful life is estimated to be 10 years. Any remaining excess fair value is attributable to an unrecorded process trade secret with an estimated future life of 4 years. Calvin’s total acquisition date fair value is $110,520. At the end of the year, Calvin reports the following in its financial statements: Revenues $ 57,750 Machine $ 12,600 Common stock $ 14,000 Expenses 24,150 Other assets 30,000 Retained earnings 28,600 Net income $ 33,600 Total assets $ 42,600 Total equity $ 42,600 Dividends paid $ 5,000 Determine the amounts that Beckman should report in its year-end consolidated financial statements for noncontrolling interest in subsidiary income, noncontrolling interest, Calvin’s machine (net of accumulated depreciation), and the process trade secret.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $66,312. Calvin Co. has one recorded asset, a specialized production machine with a book value of $14,000 and no liabilities. The fair value of the machine is $100,000, and the remaining useful life is estimated to be 10 years. Any remaining excess fair value is attributable to an unrecorded process trade secret with an estimated future life of 4 years. Calvin’s total acquisition date fair value is $110,520.
At the end of the year, Calvin reports the following in its financial statements:
| Revenues | $ | 57,750 | Machine | $ | 12,600 | Common stock | $ | 14,000 | |||
| Expenses | 24,150 | Other assets | 30,000 | 28,600 | |||||||
| Net income | $ | 33,600 | Total assets | $ | 42,600 | Total equity | $ | 42,600 | |||
| Dividends paid | $ | 5,000 | |||||||||
Determine the amounts that Beckman should report in its year-end consolidated financial statements for noncontrolling interest in subsidiary income, noncontrolling interest, Calvin’s machine (net of
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