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Discuss fair value is attributable to an unrecorded process

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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 $ 13,100  
  Expenses   29,250     Other assets   28,710     Retained earnings   27,400  
     
    Net income $ 32,400        Total assets $ 40,500       Total equity $ 40,500  
     
  Dividends paid $ 5,000 

Reference no: EM131774666

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