On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $306,000 when K-Tech’s book value was $406,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $204,000. At the acquisition date, K-Tech's trademark (10-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (5-year remaining life) was undervalued by $24,000. In 2020, K-Tech reports $28,000 net income and declares no dividends. At the end of 2021, the two companies report the following figures (stockholders’ equity accounts have been omitted): French Company Carrying Amounts K-Tech Company Carrying Amounts K-Tech Company Fair Values Current assets $ 624,000 $ 304,000 $ 324,000 Trademarks 264,000 204,000 284,000 Patented technology 414,000 154,000 178,000 Liabilities (394,000 ) (124,000 ) (124,000 ) Revenues (904,000 ) (404,000 ) Expenses 496,000 304,000 Investment income Not given Note: Parentheses indicate a credit balance. In 2021, assuming K-Tech 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?
On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $306,000 when K-Tech’s book value was $406,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $204,000. At the acquisition date, K-Tech's trademark (10-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (5-year remaining life) was undervalued by $24,000. In 2020, K-Tech reports $28,000 net income and declares no dividends. At the end of 2021, the two companies report the following figures (stockholders’ equity accounts have been omitted): French Company Carrying Amounts K-Tech Company Carrying Amounts K-Tech Company Fair Values Current assets $ 624,000 $ 304,000 $ 324,000 Trademarks 264,000 204,000 284,000 Patented technology 414,000 154,000 178,000 Liabilities (394,000 ) (124,000 ) (124,000 ) Revenues (904,000 ) (404,000 ) Expenses 496,000 304,000 Investment income Not given Note: Parentheses indicate a credit balance. In 2021, assuming K-Tech 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?
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 8MC
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On January 1, 2020, French Company acquired 60 percent of K-Tech Company for $306,000 when K-Tech’s book value was $406,000. The fair value of the newly comprised 40 percent noncontrolling interest was assessed at $204,000. At the acquisition date, K-Tech's trademark (10-year remaining life) was undervalued in its financial records by $80,000. Also, patented technology (5-year remaining life) was undervalued by $24,000.
In 2020, K-Tech reports $28,000 net income and declares no dividends. At the end of 2021, the two companies report the following figures (
| French Company Carrying Amounts |
K-Tech Company Carrying Amounts |
K-Tech Company Fair Values |
|||||||||
| Current assets | $ | 624,000 | $ | 304,000 | $ | 324,000 | |||||
| Trademarks | 264,000 | 204,000 | 284,000 | ||||||||
| Patented technology | 414,000 | 154,000 | 178,000 | ||||||||
| Liabilities | (394,000 | ) | (124,000 | ) | (124,000 | ) | |||||
| Revenues | (904,000 | ) | (404,000 | ) | |||||||
| Expenses | 496,000 | 304,000 | |||||||||
| Investment income | Not given | ||||||||||
Note: Parentheses indicate a credit balance.
In 2021, assuming K-Tech 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?
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