On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Cal
ID: 2480735 • Letter: O
Question
On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $51,816. Calvin Co. has one recorded asset, a specialized production machine with a book value of $13,500 and no liabilities. The fair value of the machine is $73,000, 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 $86,360.
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.
Noncontrolling intrest in subsidiary income
total noncontroling intrest
calvins machine (net accumlated deprectiation)
process trade secret
On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $51,816. Calvin Co. has one recorded asset, a specialized production machine with a book value of $13,500 and no liabilities. The fair value of the machine is $73,000, 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 $86,360.
Explanation / Answer
Book Values Total Fair Value of Calvin on acquisition date 86360 Fair Value of Machine on acquisition date 73000 13500 Fair Value of unrecorded trade secret 13360 0 c) Value of machine at end Fair Value at beginning 73000 Useful life 10 years Less: Depreciation 7300 = 73000/10 years Value of machine at end 65700 d) Process Trade secret Fair Value at beginning 13360 Useful life 4 years Less: Depreciation 3340 = 13360 / 4 years Value at end 10020 b) Calculating Fair Value at end Detail Amount Total Fair Value of Calvin on acquisition date 86360 Net Income for current year 42150 Add: Depreciation on machinery already charged 1350 = 13500 / 10 years Less: Depreciatioon on machinery on Fair Value 7300 Less: Depreciation on process trade secret 3340 Add: Adjusted Current year income 32860 Less: Dividend Paid 5000 Total Fair Value of Calvin at end of year 114220 -114220 Non controlling interest is 40 % 45688 = 114220 x 40 % a) Non controlling interest in subsidary income = 40 % of adjusted income = 40% of 32860 13144 Less: 40% of dividend already received = 40% of 5000 2000 Net non controlling interest in subsidary income is 11144