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On January 1, 2024, Pasture Company acquires 80% of Spring Company for $1,848,960 in cash consideration. Spring's stock is not actively traded, and therefore its total fair value must be implied. Spring's acquisition-date total book value was $1,836,000. The fair value of Spring's recorded assets and liabilities equaled their carrying amounts. However, Spring had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $264,600 and licensing agreements estimated to be worth $194,400 with four-year remaining lives. Any remaining acquisition-date fair value in the Spring acquisition was considered goodwill. During 2024, Spring reported $185,760 net income and declared and paid dividends totaling $54,000. Also in 2024, Pasture reported $378,000 net income, but neither declared nor paid dividends. Required: a. What amount should Pasture assign to the 20 percent noncontrolling interest of Spring at the acquisition date? b. How much of 2024 consolidated net income should be allocated to the noncontrolling interest? c. What amount of 2024 dividends should be allocated to the noncontrolling interest? d. What amount of noncontrolling interest should appear in the owners' equity section of Pasture's consolidated balance sheet at December 31, 2024?

On January 1, 2024, Pasture Company acquires 80% of Spring Company for $1,848,960 in cash consideration. Spring's stock is not actively traded, and therefore its total fair value must be implied. Spring's acquisition-date total book value was $1,836,000. The fair value of Spring's recorded assets and liabilities equaled their carrying amounts. However, Spring had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $264,600 and licensing agreements estimated to be worth $194,400 with four-year remaining lives. Any remaining acquisition-date fair value in the Spring acquisition was considered goodwill. During 2024, Spring reported $185,760 net income and declared and paid dividends totaling $54,000. Also in 2024, Pasture reported $378,000 net income, but neither declared nor paid dividends. Required: a. What amount should Pasture assign to the 20 percent noncontrolling interest of Spring at the acquisition date? b. How much of 2024 consolidated net income should be allocated to the noncontrolling interest? c. What amount of 2024 dividends should be allocated to the noncontrolling interest? d. What amount of noncontrolling interest should appear in the owners' equity section of Pasture's consolidated balance sheet at December 31, 2024?

Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter12: Intangibles
Section: Chapter Questions
Problem 18E
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On January 1, 2024, Pasture Company acquires 80% of Spring Company for $1,848,960 in cash consideration. Spring's stock is not actively traded, and therefore its total fair value must be implied. Spring's acquisition-date total book value was $1,836,000. The fair value of Spring's recorded assets and liabilities equaled their carrying amounts. However, Spring had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $264,600 and licensing agreements estimated to be worth $194,400 with four-year remaining lives. Any remaining acquisition-date fair value in the Spring acquisition was considered goodwill. During 2024, Spring reported $185,760 net income and declared and paid dividends totaling $54,000. Also in 2024, Pasture reported $378,000 net income, but neither declared nor paid dividends. Required: a. What amount should Pasture assign to the 20 percent noncontrolling interest of Spring at the acquisition date? b. How much of 2024 consolidated net income should be allocated to the noncontrolling interest? c. What amount of 2024 dividends should be allocated to the noncontrolling interest? d. What amount of noncontrolling interest should appear in the owners' equity section of Pasture's consolidated balance sheet at December 31, 2024? a. Value to be assigned to noncontrolling interest (NCI) at acquisition date b. Consolidated net income allocation to noncontrolling interest $ 277,992 $ 112,752 c. Dividend allocation to noncontrolling interest d. Noncontrolling interest in Spring $ 10,800 $ 380,944
Transcribed Image Text:On January 1, 2024, Pasture Company acquires 80% of Spring Company for $1,848,960 in cash consideration. Spring's stock is not actively traded, and therefore its total fair value must be implied. Spring's acquisition-date total book value was $1,836,000. The fair value of Spring's recorded assets and liabilities equaled their carrying amounts. However, Spring had two unrecorded assets- a trademark with an indefinite life and estimated fair value of $264,600 and licensing agreements estimated to be worth $194,400 with four-year remaining lives. Any remaining acquisition-date fair value in the Spring acquisition was considered goodwill. During 2024, Spring reported $185,760 net income and declared and paid dividends totaling $54,000. Also in 2024, Pasture reported $378,000 net income, but neither declared nor paid dividends. Required: a. What amount should Pasture assign to the 20 percent noncontrolling interest of Spring at the acquisition date? b. How much of 2024 consolidated net income should be allocated to the noncontrolling interest? c. What amount of 2024 dividends should be allocated to the noncontrolling interest? d. What amount of noncontrolling interest should appear in the owners' equity section of Pasture's consolidated balance sheet at December 31, 2024? a. Value to be assigned to noncontrolling interest (NCI) at acquisition date b. Consolidated net income allocation to noncontrolling interest $ 277,992 $ 112,752 c. Dividend allocation to noncontrolling interest d. Noncontrolling interest in Spring $ 10,800 $ 380,944
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