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 Company Carrying Amounts K-Tech Company Carrying Amounts K-Tech Company Fair 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 ) Expenses 496,000 304,000 Investment income Not given Note: Parentheses indicate a credit balance. In 2021, assuming K-Tech has declared no dividends, what are the noncontrolling interest’s share of the subsidiary’s income and the ending balance of the noncontrolling interest in the subsidiary?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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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 Company Carrying Amounts		K-Tech Company Carrying Amounts	K-Tech Company Fair 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	)
Expenses		496,000			304,000
Investment income		Not given

Note: Parentheses indicate a credit balance.

In 2021, assuming K-Tech has declared no dividends, what are the noncontrolling interest’s share of the subsidiary’s income and the ending balance of the noncontrolling interest in the subsidiary?

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