On January 1, Beckman, Incorporated, acquires 60 percent of the outstanding stock of Calvin for $59,232. Calvin Company has onerecorded asset, a specialized production machine with a book value of $19,500 and no liabilities. The fair value of the machine is$87,000, and the remaining useful life is estimated to be 10 years. Any remaining excess fair value is attributable to an unrecordedprocess trade secret with an estimated future life of 4 years. Calvin's total acquisition date fair value is $98,720.At the end of the year, Calvin reports the following in its financial statements:RevenuesExpenses$ 65,55026,100Net incomeDividends paid$ 39,450MachineOther assetsTotal assets$ 17,55036,400$ 53,950Common stockRetained earningsTotal equity$ 19,50034,450$ 53,950$ 5,000Required:Determine the amounts that Beckman should report in its year-end consolidated financial statements for noncontrolling interest insubsidiary income, noncontrolling interest, Calvin's machine (net of accumulated depreciation), and the process trade secret.Noncontrolling interest in subsidiary incomeTotal noncontrolling interestCalvin's machine (net accumulated depreciation)Process trade secretAmount

Step 1: Net Income multiplied by (1-0.60) Step 2: Total Equity multiplied by (1-0.60) Step 3: Fair…

Answered: On January 1, Beckman, Incorporated,…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

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On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $58,884. Calvin Co. has one recorded asset, a specialized production machine with a book value of $15,100 and no liabilities. The fair value of the machine is $88,100, 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 $98,140. At the end of the year, Calvin reports the following in its financial statements: $ 65,550 29,250 Machine Other assets $ 13,590 32,810 Common stock Retained earnings $ 15,100 31, 300 $ 46,400 Revenues Expenses Net income $ 36,300 Total assets $ 46,400 Total equity 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…
In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco restaurant chain. The purchase price allocation included the following items: $4 million, patent; $5 million, trademark considered to have an indefinite useful life; and $6 million, goodwill. Burger Mania’s policy is to amortize intangible assets with finite useful lives using the straight-line method, no residual value, and a five-year service life. What is the total amount of amortization expense that would appear in Burger Mania’s income statement for the first year ended December 31 related to these items?
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In early January, Burger Mania acquired 100% of the common stock of the Crispy Taco restaurant chain. The purchase price allocation included the following items: $5 million, patent; $4 million, trademark considered to have an indefinite useful life; and $6 million, goodwill. Burger Mania's policy is to amortize intangible assets with finite useful lives using the straight-line method, no residual value, and a five-year service life. What is the total amount of amortization expense that would appear in Burger Mania's income statement for the first year ended December 31 related to these items? (Enter your answer in dollars, not in millions (i.e. 5 should be entered as 5,000,000).)
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The following information concerns the intangible assets of Epstein Corporation:a. On June 30, 2021, Epstein completed the acquisition of the Johnstone Corporation for $2,000,000 in cash. The fair value of the net identifiable assets of Johnstone was $1,700,000.b. Included in the assets purchased from Johnstone was a patent that was valued at $80,000. The remaining legal life of the patent was 13 years, but Epstein believes that the patent will only be useful for another eight years.c. Epstein acquired a franchise on October 1, 2021, by paying an initial franchise fee of $200,000. The contractual life of the franchise is 10 years.Required:1. Prepare year-end adjusting journal entries to record amortization expense on the intangibles at December 31, 2021.2. Prepare the intangible asset section of the December 31, 2021, balance sheet.
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Tyra Company acquired all of Jay Corporation's assets and liabilities on June 30, 2021. Jay reported assets with a book value of P1,000,000 and liabilities of P550,000. Tyra noted that Jay included the amount P70,000 for an obsolete inventory at the acquisition date that did not appear to have any value. Tyra also determined that an old machine previously used by Jay had a fair value of P150,000 but had not been recorded by Jay. Except for machinery and equipment, all the other assets and liabilities of Jay approximated their fair values. In recording the transfer of assets and liabilities in its books, Tyra recorded a gain of P150,000 and paid P340,000 to acquire Jay's net assets. If the book value of Jay's machinery and equipment was P360,000, what was their fair value?

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