On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $328,500 when K-Tech's book value was $428,500. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $219,000. 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 $39,000. In 2020, K-Tech reports $10,500 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 French Company Carrying Amounts $ 634,000 274,000 424,000 (404,000) (914,000) 486,000 Not given K-Tech Company Carrying Amounts $ 314,000 214,000 164,000 (134,000) (414,000) 314,000 K-Tech Company Fair Values $ 334,000 294,000 203,000 (134,000)

On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $328,500 when K-Tech's book value was $428,500. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $219,000. 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 $39,000. In 2020, K-Tech reports $10,500 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 French Company Carrying Amounts $ 634,000 274,000 424,000 (404,000) (914,000) 486,000 Not given K-Tech Company Carrying Amounts $ 314,000 214,000 164,000 (134,000) (414,000) 314,000 K-Tech Company Fair Values $ 334,000 294,000 203,000 (134,000)

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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