On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Cal
ID: 2461653 • Letter: O
Question
On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $58,704. Calvin Co. has one recorded asset, a specialized production machine with a book value of $13,100 and no liabilities. The fair value of the machine is $85,600, 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 $97,840.
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.
At the end of the year, Calvin reports the following in its financial statements:Explanation / Answer
PARENT COMPANY CONCEPT:-
CONSOLIDATED FIGURES:-
1) NonControlling INterest in susbsidary's income = (61650 - 29250) * 40% = $ 12960 (Note: expenses do not include excess amortization.)
2) End of year Non Controlling Interest:-
3) Machine
4) Process Trade secret = 7344 - 1836 = $ 5508
$ Purchase price 58704 Book Value of Machine (13100 * 60%) 7860 50844 Purchase price in excess of book value of machine (85600 - 13100) *60% 43500 per year = 43500/10 = 4350 To Process Trade Secret 7344 per year = 7344 /4 = 1836