On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $70,320. Calvin Co. has one recorded asset, a specialized production machine with a book value of $17,700 and no liabilities. The fair value of the machine is $106,200, 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 $117,200. At the end of the year, Calvin reports the following in its financial statements: Revenues $ 56,700 Machine $ 15,930 Common stock $ 17,700 Expenses 21,750 Other assets 31,720 Retained earnings 29,950 Net income $ 34,950 Total assets $ 47,650 Total equity $ 47,650 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 $70,320. Calvin Co. has one recorded asset, a specialized production machine with a book value of $17,700 and no liabilities. The fair value of the machine is $106,200, 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 $117,200. At the end of the year, Calvin reports the following in its financial statements: Revenues $ 56,700 Machine $ 15,930 Common stock $ 17,700 Expenses 21,750 Other assets 31,720 Retained earnings 29,950 Net income $ 34,950 Total assets $ 47,650 Total equity $ 47,650 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 $70,320. Calvin Co. has one recorded asset, a specialized production machine with a book value of $17,700 and no liabilities. The fair value of the machine is $106,200, 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 $117,200.
At the end of the year, Calvin reports the following in its financial statements:
| Revenues | $ | 56,700 | Machine | $ | 15,930 | Common stock | $ | 17,700 | |||
| Expenses | 21,750 | Other assets | 31,720 | 29,950 | |||||||
| Net income | $ | 34,950 | Total assets | $ | 47,650 | Total equity | $ | 47,650 | |||
| 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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