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On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $58,704....

Question:

On January 1, Beckman, Inc., acquires 60 percent of the outstanding stock of Calvin for $58,704. Calvin Co. has one recorded asset, a specialized production machine with a book value of $13,100 and no liabilities. The fair value of the machine is $85,600, 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 total acquisition date fair value is $97,840.

At the end of the year, Calvin reports the following in its financial statements:

Revenues $ 61,650
Machine $ 11,790
Common stock $ 10,000
Expenses $ 29,250
Other assets $ 25,610
Retained earnings $ 27,400
Net income $ 32,400
Total assets $ 37,400
Total equity $ 37,400
Dividends paid $ 5,000

Determine the amounts that Beckman should report in its year-end consolidated financial statements for:

1. noncontrolling interest in subsidiary income

2. noncontrolling interest

Non Controlling interest

Non controlling interest is the portion where the parent who has ownership of 50% or more, has no more control over its subsidiary.

Answer and Explanation:

1. The noncontrolling interest in subsidiary income is 8,836

Net Income - Subsidiary 32,400
Amortization expenses -10,310
Income 22,090
40%
Income to NCI 8,836


Amortization Expenses
Machine (85,600 - 13,100) / 10 7,250
Process trade secret (84,740 - 72,500) / 4 3,060
Total 10,310


2. The noncontrolling interest ending is $45,972.

Beginning balance (97,840 * 40%) 39,136
Net Income Allocation 8,836
Dividends (5,000 * 40%) -2,000
NCI Ending balance 45,972

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