West Company acquired 60 percent of Solar Company for $306,000 when Solars book value was $406,000. The
Question:
West Company acquired 60 percent of Solar Company for $306,000 when Solar’s book value was $406,000. The newly comprised 40 percent noncontrolling interest had an assessed fair value of $204,000. Also at the acquisition date, Solar had a trademark (with a 10-year life) that was undervalued in the financial records by $62,000. Also, patented technology (with a 5-year life) was undervalued by $42,000. Two years later, the following figures are reported by these two companies (stockholders’ equity accounts have been omitted):
West Company Book Value | Solar Company Book Value | Solar Company Fair Value | |||||||||
Current assets | $ | 645,000 | $ | 325,000 | $ | 345,000 | |||||
Trademarks | 285,000 | 225,000 | 305,000 | ||||||||
Patented technology | 435,000 | 175,000 | 175,000 | ||||||||
Liabilities | (415,000 | ) | (145,000 | ) | (145,000 | ) | |||||
Revenues | (925,000 | ) | (425,000 | ) | |||||||
Expenses | 475,000 | 325,000 | |||||||||
Investment income | Not given |
What is the consolidated net income before allocation to the controlling and noncontrolling interests?
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?
What is the consolidated trademarks balance?
Accounting concepts and applications
ISBN: 978-0538745482
11th Edition
Authors: Albrecht Stice, Stice Swain