Question

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 life) that was undervalued in the financial records by $60,000. Also, patented technology (with a 5-year life) was undervalued by $40,000. Two years later, the following figures are reported by these two companies (stockholders’ equity accounts have been omitted):


What is the consolidated net income before allocation to the controlling and noncontrolling interests?
a. $400,000.
b. $486,000.
c. $491,600.
d.$500,000.


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  • CreatedOctober 04, 2014
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