On December 31, 2014, Patenne Incorporated purchased 60% of Smolin Manufacturing for $300,000. The book value and fair value of Smolin's assets and liabilities were equal with the exception of plant assets which were undervalued by $60,000 and had a remaining life of 10 years, and a patent which was undervalued by $40,000 and had a remaining life of 5 years. At December 31, 2016, the companies showed the following balances on their respective adjusted trial balances:
Requirement 1: Calculate the balance in the Plant assets - net and the Patent accounts on the consolidated balance sheet as of December 31, 2016.
Requirement 2: Calculate consolidated net income for 2016, and the amount allocated to the controlling and noncontrolling interests.
Requirement 3: Calculate the balance of the noncontrolling interest in Smolin to be reported on the consolidated balance sheet at December 31, 2016.

Question

On December 31, 2014, Patenne Incorporated purchased 60% of Smolin Manufacturing for $300,000. The book value and fair value of Smolin's assets and liabilities were equal with the exception of plant assets which were undervalued by $60,000 and had a remaining life of 10 years, and a patent which was undervalued by $40,000 and had a remaining life of 5 years. At December 31, 2016, the companies showed the following balances on their respective adjusted trial balances:
  Requirement 1: Calculate the balance in the Plant assets - net and the Patent accounts on the consolidated balance sheet as of December 31, 2016.
Requirement 2: Calculate consolidated net income for 2016, and the amount allocated to the controlling and noncontrolling interests.
Requirement 3: Calculate the balance of the noncontrolling interest in Smolin to be reported on the consolidated balance sheet at December 31, 2016.

Quizplus · Accepted Answer

The Answer of On December 31, 2014, Patenne Incorporated purchased 60% of Smolin Manufacturing for $300,000. The book value and fair value of Smolin's assets and liabilities were equal with the exception of plant assets which were undervalued by $60,000 and had a remaining life of 10 years, and a patent which was undervalued by $40,000 and had a remaining life of 5 years. At December 31, 2016, the companies showed the following balances on their respective adjusted trial balances:
  Requirement 1: Calculate the balance in the Plant assets - net and the Patent accounts on the consolidated balance sheet as of December 31, 2016.
Requirement 2: Calculate consolidated net income for 2016, and the amount allocated to the controlling and noncontrolling interests.
Requirement 3: Calculate the balance of the noncontrolling interest in Smolin to be reported on the consolidated balance sheet at December 31, 2016.

On December 31, 2014, Patenne Incorporated Purchased 60% of Smolin