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Problem: On January 1, Beckham Inc acquires 60 percent of the outstanding stock of Calvin for $36,000. Calvin Co. has one recorded asset, a specialized productioin machine with a book value of $10,000 and no liabilities. The fair value of the machine is $50,000 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 to tal acquisition-date fair value is $60,000.
At the end of the year, Calvin reports the following in its financial statements:
Revenues 50,000 Machine 9,000 Common stock 10,000
Expenses 20,000 Other Assets 26,000 Retained earnings 25,000
Net Income (revenues - expenses) 30,000 Total Assets (machine + other assets) 35,000 Total equity (common stock + retained earnings) 35,000
Dividends paid $5,000
Determine the amounts that Beckham should report in its year-end consolidated financial statements for noncontrolling interest in subsidiary income, total outstanding interest, Calvin's machine (net of accumulated depreciation), and the process trade secret.