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 |