On January 1, 2023, French Company acquired 60 percent of K-Tech Company for $331,500 when K-Tech's book value was $431,500.The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $221,000. At the acquisition date, K-Tech'strademark (10-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (5-year remaininglife) was undervalued by $41,000.In 2023, K-Tech reports $19,500 net income and declares no dividends. At the end of 2024, the two companies report the followingfigures (stockholders' equity accounts have been omitted):ItemsCurrent assetsTrademarksPatented technologyLiabilitiesRevenuesExpensesInvestment income.French CompanyCarrying Amounts$ 641,000281,000431,000(411,000)(921,000)479,000Not givenNote: Parentheses indicate a credit balance.K-Tech CompanyCarrying Amounts$ 321,000221,000171,000(141,000)(421,000)321,0000a. Consolidated net incomeb(1). Noncontrolling interest's share of the subsidiary's incomeb(2). Noncontrolling interest at end of 2024c. Consolidated trademarksK-Tech CompanyFair Values$ 341,000301,000212,000(141,000)080Required:a. Compute the 2024 consolidated net income before allocation to the controlling and noncontrolling interests.b. In 2024, assuming K-Tech has declared no dividends, compute the noncontrolling interest's share of the subsidiary's income andthe ending balance of the noncontrolling interest in the subsidiary.c. Compute the amount reported for trademarks in the 2024 consolidated balance sheet.

Consolidation is a financial reporting process used to combine the financial statements of parent…

Answered: a. Consolidated net income b(1).…

a. Consolidated net income b(1). Noncontrolling interest's share of the subsidiary's income b(2). Noncontrolling interest at end of 2024 c. Consolidated trademarks

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter10: Cost Recovery On Property: Depreciation, Depletion, And Amortization

Section: Chapter Questions

Problem 62P

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