Question

On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $61,680. Calvin Co. has one recorded asset, a specialized production machine with a book value of $18,200 and no liabilities. The fair value of the machine is $92,200, 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 $102,800.

At the end of the year, Calvin reports the following in its financial statements:

Revenues	$	63,150		Machine	$	16,380		Common stock	$	10,000
Expenses		31,050		Other assets		20,720		Retained earnings		27,100
Net income	$	32,100		Total assets	$	37,100		Total equity	$	37,100
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.

	Amount Noncontrolling interest in subsidiary income Total noncontrolling interest Calvin's machine (net accumulated depreciation) Process trade secret

Answer 1

Answer: PageNoo non controllina intrest in subsidiary Income Fair value of company = 102,800 Book value = -18,200 fair value in excess of book value = 102,800 -18,200 = 84.600 To machine = ($92,200 - $ 18,200) = $74,000 = 14000 10 years = 7.400 per year To proces trade secret = 10,600, 34 years = 10,600 = 2650 per year 4,400 +2,650 = 10,050 per year

Pagenda Amount 63,150 Particulars Revenue Expendes C31 050 + 10,050) Income Non controlling intrest percentage 41,100 22,050 40% Net income attributable to non controll 22050X0.4 ing interest = 8,820 Total Non controlling Intrest: - Particulars Amount 407. of 102,800 Begining balance = 94120 46,120 Net Income allocation 8,820 Dividend reduction wov, ofsood 2,000 Total Mon Controlling 44120+8,8201 Intrelt :-2000 = 47,900

Pageno Calvin machine nett 1 Particulars Amount Book Value 16.380 (All) Excell Allocation +34_000 letely Excess deporeciation for year - 4,400 46380+ 44000 L Machine (net) -4400 Lesa 980 Proculs trade secret Particulars Value Amourit.com 10.16.00 I ell. Excell reduction for Year 1-2,650 Poroull trade secret cnet) 19 90