Question

Check my wo On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $45,780. Calvin Co. has one recorded asset, a specialized production machine with a book value of $13,400 and no liabilities. The fair value of the machine is $ 64,900, 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 $76,300. At the end of the year, Calvin reports the following in its financial statements: Revenues Expenses Net income Dividends paid $ 64,050 26,550 $ 37,500 $ 5,000 Machine Other assets Total assets $ 12,060 33,840 $ 45,900 Common stock Retained earnings Total equity $ 13,400 32,500 $ 45,900 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

A B С D 23 24 Non controlling interest in subsidiary income Total non-controlling interest Calvin's machine(net accumulated depreciation) Process trade secret $11,800 $40,320 $58,410 $8,550 25 26 27 28 29 30 31 32 33 34 35 64,050 a). Revenues Less: Expenses Depreciation on machine Amortization on process trade secrets Revised income Non controlling interest percentage Non controlling interest in subsidiary income 26,550 5,150 2,850 34550 29,500 40% 11800 36 37 Fair value of machine Book value of machine Difference Estimated useful life Depreciation on machine 64,900 13,400 51,500 10 years 5150 38 39 40 41 42 43 44 45 46 47 48 49 Fair value of acquisition Fair value of machine Difference Estimated future life Amortization on process trade secrets 76300 64900 11400 4 2850 50

А B с 50 51 52 53 54 b). Beginning balance Add: Share of income Less: Dividend paid Total non-controlling interest 30520 11800 2000 40320 55 56 57 58 c). Beginning balance Add: Increase in value Less: Depreciation Calvin's machine(net accumulated depreciation) 12060 51,500 5150 58,410 59 60 61 62 63 64 65 d). Book value Less: Amortization Process trade secret 11400 2850 8550 66 67

A D B Non controlling interest in subsidiary income Total non-controlling interest Calvin's machine(net accumulated depreciation) Process trade secret C $11,800 $40,320 $58,410 $8,550 24 25 26 27 28 29 30 31 64050 32 33 a). Revenues Less: Expenses Depreciation on machine Amortization on process trade secrets Revised income Non controlling interest percentage Non controlling interest in subsidiary income 26550 =C43 =C49 =C31+C32+C33 =D30-D33 0.4 =D34*D35 34 35 36 37 38 39 40 41 Fair value of machine Book value of machine Difference Estimated useful life Depreciation on machine 64900 13400 =C39-C40 42 10 years 43 =C41/10 44 45 46 47 Fair value of acquisition Fair value of machine Difference Estimated future life Amortization on process trade secrets 76300 64900 =C45-C46 4 =C47/C48 48 49

A B С 50 51 52 53 54 55 b). Beginning balance Add: Share of income Less: Dividend paid Total non-controlling interest =76300*40% =D36 =5000*40% =C52+C53-C54 56 57 58 59 60 61 62 63 64 65 66 c). Beginning balance 12060 Add: Increase in value =C41 Less: Depreciation =C43 Calvin's machine(net accumulated depreciation) =C58+C59-C60 d). Book value Less: Amortization Process trade secret =C47 =C49 =C64-C65