A-7 On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $325,500 when K-Tech's book valuewas $425,500. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $217,000. At theacquisition 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 $37,000.In 2020, K-Tech reports $21,500 net income and declares no dividends. At the end of 2021, the two companies report thefollowing figures (stockholders' equity accounts have been omitted):Current assetsTrademarksPatented technologyLiabilitiesRevenuesExpensesInvestment incomeFrenchCompanyCarryingAmounts$ 637,000277,000427,000(407,000)(917,000)483,000Not givenK-Tech CompanyCarryingAmountsProblem 4-14 (Algo) (LO 4-2)$Note: Parentheses indicate a credit balance.317,000217,000167,000(137,000)(417,000)317,000K-Tech CompanyFair Values337,000$297,000204,000(137,000)What is the 2021 consolidated net income before allocation to the controlling and noncontrolling interests?

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Answered: What is the 2021 consolidated net…

Business

Accounting

What is the 2021 consolidated net income before allocation to the controlling and noncontrolling interests?

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions

Section: Chapter Questions

Problem 38P

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On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $306,000 when K-Tech’s book value was $406,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $204,000. 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 $24,000. In 2020, K-Tech reports $28,000 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 CompanyCarrying Amounts K-Tech CompanyCarrying Amounts K-Tech CompanyFair Values Current assets $ 624,000 $ 304,000 $ 324,000 Trademarks 264,000 204,000 284,000 Patented technology 414,000 154,000 178,000 Liabilities (394,000 ) (124,000 ) (124,000 ) Revenues (904,000 ) (404,000 )…
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