n January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $36,000. Calvin Co. has one recorded asset, a specialized production machine with a book value of $10,000 and no liabilities. The fair value of the machine is $50,000, 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 $60,000. At the end of the year, Calvin reports the following in its financial statements: Revenues $ 50,000 Machine $ 9,000 Common stock $ 10,000 Expenses 20,000 Other assets 26,000 Retained earnings 25,000 Net income $ 30,000 Total assets $ 35,000 Total equity $ 35,000 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.
n January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $36,000. Calvin Co. has one recorded asset, a specialized production machine with a book value of $10,000 and no liabilities. The fair value of the machine is $50,000, 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 $60,000. At the end of the year, Calvin reports the following in its financial statements: Revenues $ 50,000 Machine $ 9,000 Common stock $ 10,000 Expenses 20,000 Other assets 26,000 Retained earnings 25,000 Net income $ 30,000 Total assets $ 35,000 Total equity $ 35,000 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 $36,000. Calvin Co. has one recorded asset, a specialized production machine with a book value of $10,000 and no liabilities. The fair value of the machine is $50,000, 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 $60,000.
At the end of the year, Calvin reports the following in its financial statements:
| Revenues | $ | 50,000 | Machine | $ | 9,000 | Common stock | $ | 10,000 | |||
| Expenses | 20,000 | Other assets | 26,000 | 25,000 | |||||||
| Net income | $ | 30,000 | Total assets | $ | 35,000 | Total equity | $ | 35,000 | |||
| 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.
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