Question

Required Information West Company acquired 60 percent of Solar Company for $300.000 when Solar's book value was $400,000. The newly comprised 40 percent noncontrolling interest had an assessed fair value of $200,000. Also at the acquisition date, Solar had a trademark (with a 10-year remaining life) that was undervalued in the financial records by $60,000. Also, patented technology (with a 5-year remaining life) was undervalued by $40,000. Two years later, the following figures are reported by these two companies (stockholders' equity accounts have been omitted): Current assets Trademarks Patented technology Liabilities Revenues Expenses Investment income West Company Book Value $ 620,000 260.ee 410,000 (390,000) (gee, 080) 500,000 Not given Solar Company Book Value $ 300,000 200,000 150,00 (129,90) (488.eae) 300,000 Solar Company Fair Value $ 32e.ee 280,000 150,00 (120,) Note: Parentheses indicate a credit balance. Assuming Solar Company has declared no dividends, what are the noncontrolling interest's share of the subsidiary's income and the ending balance of the noncontrolling interest in the subsidiary?

Can you show me these solutions in more detail? For example, where the 14,000 excess amortization comes from? Where the 430,000 solar book value comes from? Where the 11,200 NCI share of excess comes from? etc

Answer 1

$14000 excess amortization calculation below
		Life	Amortization per year
Trademark undervalued by	$60,000	10 years	$6,000
Patented Technology	40000	5	8000
		Total	$14,000	excess amortization per year
Fair value of $200000 at acquisition of non controlling interest provided in question
$430000 solar book value calculation is
Current assets	$300,000
Trademaeks	200000
Patentend technology	150000
Less: liabilities	-120000
Solar book value at the end of year 2	$530,000
Less: The trademark and patented technology were undervalued at the date of acquiistion hence to get the beginning balance (60000+40000) $100000 needs to be subtracted	-100000
Beginning Book value	$430,000
$11200 fair value amortization
(14000*2 years*40%)	11200
$400000 solar book value at the acqusuition date given in the question
$5600 calculation is 14000*40%	5600
I hope this clears your doubt. If still any doubt please comment