On January 1, 2023, 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 2023, K-Tech reports $24,000 net income and declares no dividends. At the end of 2024, the two companies report the following figures (stockholders' equity accounts have been omitted): Items Current assets Trademarks Patented technology Liabilities Revenues Expenses Investment income French Company Carrying Amounts $ 622,000 262,000 412,000 (392,000) K-Tech Company Carrying Amounts $ 302,000 202,000 152,000 (122,000) (902,000) (402,000) 498,000 302,000 Not given 0 K-Tech Company Fair Values $ 322,000 282,000 176,000 (122,000) Ө 0 Ө Note: Parentheses indicate a credit balance. Required: a. Compute the 2024 consolidated net income before allocation to the controlling and noncontrolling interests. b. In 2024, assuming K-Tech has declared no dividends, compute the noncontrolling interest's share of the subsidiary's income and the ending balance of the noncontrolling interest in the subsidiary. c. Compute the amount reported for trademarks in the 2024 consolidated balance sheet. a. Consolidated net income $ 491,200 b(1). Noncontrolling interest's share of the subsidiary's income b(2). Noncontrolling interest at end of 2024 c. Consolidated trademarks
On January 1, 2023, 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 2023, K-Tech reports $24,000 net income and declares no dividends. At the end of 2024, the two companies report the following figures (stockholders' equity accounts have been omitted): Items Current assets Trademarks Patented technology Liabilities Revenues Expenses Investment income French Company Carrying Amounts $ 622,000 262,000 412,000 (392,000) K-Tech Company Carrying Amounts $ 302,000 202,000 152,000 (122,000) (902,000) (402,000) 498,000 302,000 Not given 0 K-Tech Company Fair Values $ 322,000 282,000 176,000 (122,000) Ө 0 Ө Note: Parentheses indicate a credit balance. Required: a. Compute the 2024 consolidated net income before allocation to the controlling and noncontrolling interests. b. In 2024, assuming K-Tech has declared no dividends, compute the noncontrolling interest's share of the subsidiary's income and the ending balance of the noncontrolling interest in the subsidiary. c. Compute the amount reported for trademarks in the 2024 consolidated balance sheet. a. Consolidated net income $ 491,200 b(1). Noncontrolling interest's share of the subsidiary's income b(2). Noncontrolling interest at end of 2024 c. Consolidated trademarks
Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization
Section: Chapter Questions
Problem 62P
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Transcribed Image Text:On January 1, 2023, 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 2023, K-Tech reports $24,000 net income and declares no dividends. At the end of 2024, the
two companies report the following figures (stockholders' equity accounts have been omitted):
Items
Current assets
Trademarks
Patented technology
Liabilities
Revenues
Expenses
Investment income
French Company
Carrying Amounts
$ 622,000
262,000
412,000
(392,000)
K-Tech Company
Carrying Amounts
$ 302,000
202,000
152,000
(122,000)
(902,000)
(402,000)
498,000
302,000
Not given
0
K-Tech Company
Fair Values
$ 322,000
282,000
176,000
(122,000)
Ө
0
Ө
Note: Parentheses indicate a credit balance.
Required:
a. Compute the 2024 consolidated net income before allocation to the controlling and
noncontrolling interests.
b. In 2024, assuming K-Tech has declared no dividends, compute the noncontrolling interest's
share of the subsidiary's income and the ending balance of the noncontrolling interest in the
subsidiary.
c. Compute the amount reported for trademarks in the 2024 consolidated balance sheet.
a. Consolidated net income
$
491,200
b(1). Noncontrolling interest's share of the subsidiary's income
b(2). Noncontrolling interest at end of 2024
c. Consolidated trademarks
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