Recognition upon initial consolidation of a variable interest entity (VIE) when VIE is a business Assume...
Recognition upon initial consolidation of a variable interest entity (VIE) when VIE is a business Assume that prior to January 1, 2016, a Reporting Company owned a 10 percent interest in a Legal Entity. The Reporting Company acquired its 10 percent ownership interest in the Legal Entity on June 15, 1995 for $20,000, and correctly accounted for this investment under the cost method (i.e., it was a passive investment and it was not marketable). On January 1, 2016, the Reporting Company purchased an additional 30 percent interest in the Legal Entity for $150,000. As a result of an evaluation of the facts and circumstances on January 1, 2016, the Reporting Entity determined that the Legal Entity is a variable interest entity (VIE) and that the Reporting Company is the primary beneficiary of the VIE. The Reporting Company also determined that, on January 1, 2016, the fair value of the previously held 10 percent interest is $50,000. In addition, independent appraisals revealed that the fair value of the noncontrolling interest (i.e., the 60 percent not owned by the Reporting Company) is $300,000. On January 1, 2016, the Legal Entity has reported book values for its identifiable net assets equal to $350,000 and fair values for its identifiable net assets equal to $450,000. Assume that the Legal Entity is a “business,” as that term is defined in FASB ASC 805 (“Business Combinations”). Related to the initial consolidation of the Legal Entity on January 1, 2016, determine the following amounts:
a. Goodwill $Answer 50,000
b. Gain (Loss) on initial consolidation of the Legal Entity Use a negative sign with answer to indicate a loss. $Answer
Homework Answers
Add Answer to:
Recognition upon initial consolidation of a variable interest
entity (VIE) when VIE is a business Assume...
Recognition upon initial consolidation of a variable interest entity (VIE) when VIE is not a business...
Recognition upon initial consolidation of a variable interest entity (VIE) when VIE is not a business Assume that prior to January 1, 2019, a Reporting Company owned a 15 percent interest in a Legal Entity. The Reporting Company acquired its 15 percent ownership interest in the Legal Entity on June 15, 1998 for $45,000, and correctly accounted for this investment under the cost method (i.e., it was a passive investment and it was not marketable). On January 1, 2019, the...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume ...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $620,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an: unrecorded Patent that the parent valued...
On January 1, Year 1, Entity A acquired 60% of Entity B's voting interests for $100,000....
On January 1, Year 1, Entity A acquired 60% of Entity B's voting interests for $100,000. The carrying amount of EntityB's assets and abilities on that date equals their fair values. The noncontrolling interest (NCI) is measured at its fair value of $50,000. Entity A and Entity Buse the same accounting principles, and no consolidating adjustments need to be made for intraentity transactions, etc., except as described below. The trial balances on December 31, Year 1. of Entity A and...
On January 1, Year 1, Entity A acquired 60% of Entity B's voting interests for $100,000....
On January 1, Year 1, Entity A acquired 60% of Entity B's voting interests for $100,000. The carrying amount of Entity's assets and liabilities on that date equals their fair values. The noncontrolling interest (NCI) is measured at its fair value of $50,000. Entity A and Entity B use the same accounting principles, and no consolidating adjustments need to be made for intraentity transactions, etc., except as described below. The trial balances on December 31, Year 1, of Entity A...
Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 7 pe...
Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 7 percent ($67,200) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $160,000 of these bonds on the open market for $181,000, a price based on an effective interest rate of 5 percent. The bond liability had a carrying amount on...
this is everything that was given. Facts: BC Business Entity, owned equally by Bernie and Carl,...
this is everything that was given.
Facts: BC Business Entity, owned equally by Bernie and Carl, reported the following items during 2018: Sales revenue 400,000 11,000 7,000 20,000 (150,000) (84,000) 8,000 (9,000) (2,000) (25,000) (40,000) Interest earned on corporate bonds Interest earned on State of Tennessee bonds Dividends from 10% owned domestic corporation Cost of goods sold Operating expenses Long-term capital gain Short-term capital loss Interest on loan used to purchase State of Tennessee Bonds Salary/guarantecd payment, paid to Bernie*...
Several years ago Brant, Inc., sold $1,000,000 in bonds to the public. Annual cash interest of 8 percent ($80,000) was t...
Several years ago Brant, Inc., sold $1,000,000 in bonds to the public. Annual cash interest of 8 percent ($80,000) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $200,000 of these bonds on the open market for $221,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on...
с 22-10 Researching GAAP AICPA Adapted Sometimes a business entity may change its method of accounting...
с 22-10 Researching GAAP AICPA Adapted Sometimes a business entity may change its method of accounting for certain items. It may classify the change as a change in accounting principle, a change in accounting estimate, or a change in reporting entity. The following are three situations faced by Hyde Company relating to accounting changes Situation I Hyde determined that the depreciable lives of its fixed assets are presently too long to fairly match the cost of the fixed assets with...
Several years ago Brant, Inc., sold $950,000 in bonds to the public. Annual cash interest of...
Several years ago Brant, Inc., sold $950,000 in bonds to the public. Annual cash interest of 8 percent ($76,000) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $190,000 of these bonds on the open market for $211,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on...
Consolidation worksheet for gain on constructive retirement of subsidiary’s debt with no AAP—Equity method Assume that...
Consolidation worksheet for gain on constructive
retirement of subsidiary’s debt with no AAP—Equity
method
Assume that a Parent company acquires a 80% interest in its
Subsidiary on January 1, 2015. On the date of acquisition, the fair
value of the 80 percent controlling interest was $640,000 and the
fair value of the 20 percent noncontrolling interest was $160,000.
On January 1, 2015, the book value of net assets equaled $800,000
and the fair value of the identifiable net assets equaled...
Consolidation on date of acquisition - Equity method with noncontrolling interest and AAP Assume that a parent company acquires an 80% interest in its subsidiary for a purchase price of $620,800. The excess of the total fair value of the controlling and noncontrolling interests over the book value of the subsidiary's Stockholders' Equity is assigned to a building (in PPE, net) that the parent believes is worth $50,000 more than its book value, an: unrecorded Patent that the parent valued...
On January 1, Year 1, Entity A acquired 60% of Entity B's voting interests for $100,000. The carrying amount of EntityB's assets and abilities on that date equals their fair values. The noncontrolling interest (NCI) is measured at its fair value of $50,000. Entity A and Entity Buse the same accounting principles, and no consolidating adjustments need to be made for intraentity transactions, etc., except as described below. The trial balances on December 31, Year 1. of Entity A and...
On January 1, Year 1, Entity A acquired 60% of Entity B's voting interests for $100,000. The carrying amount of Entity's assets and liabilities on that date equals their fair values. The noncontrolling interest (NCI) is measured at its fair value of $50,000. Entity A and Entity B use the same accounting principles, and no consolidating adjustments need to be made for intraentity transactions, etc., except as described below. The trial balances on December 31, Year 1, of Entity A...
Several years ago Brant, Inc., sold $960,000 in bonds to the public. Annual cash interest of 7 percent ($67,200) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $160,000 of these bonds on the open market for $181,000, a price based on an effective interest rate of 5 percent. The bond liability had a carrying amount on...
this is everything that was given.
Facts: BC Business Entity, owned equally by Bernie and Carl, reported the following items during 2018: Sales revenue 400,000 11,000 7,000 20,000 (150,000) (84,000) 8,000 (9,000) (2,000) (25,000) (40,000) Interest earned on corporate bonds Interest earned on State of Tennessee bonds Dividends from 10% owned domestic corporation Cost of goods sold Operating expenses Long-term capital gain Short-term capital loss Interest on loan used to purchase State of Tennessee Bonds Salary/guarantecd payment, paid to Bernie*...
с 22-10 Researching GAAP AICPA Adapted Sometimes a business entity may change its method of accounting for certain items. It may classify the change as a change in accounting principle, a change in accounting estimate, or a change in reporting entity. The following are three situations faced by Hyde Company relating to accounting changes Situation I Hyde determined that the depreciable lives of its fixed assets are presently too long to fairly match the cost of the fixed assets with...
Several years ago Brant, Inc., sold $950,000 in bonds to the public. Annual cash interest of 8 percent ($76,000) was to be paid on this debt. The bonds were issued at a discount to yield 10 percent. At the beginning of 2016, Zack Corporation (a wholly owned subsidiary of Brant) purchased $190,000 of these bonds on the open market for $211,000, a price based on an effective interest rate of 6 percent. The bond liability had a carrying amount on...
Consolidation worksheet for gain on constructive
retirement of subsidiary’s debt with no AAP—Equity
method
Assume that a Parent company acquires a 80% interest in its
Subsidiary on January 1, 2015. On the date of acquisition, the fair
value of the 80 percent controlling interest was $640,000 and the
fair value of the 20 percent noncontrolling interest was $160,000.
On January 1, 2015, the book value of net assets equaled $800,000
and the fair value of the identifiable net assets equaled...
Most questions answered within 3 hours.
-
A business executive has the option to invest money in two
plans: Plan A guarantees that...
asked 1 hour ago -
Hello, can someone please help me answer this question?
How much heat is absorbed by a...
asked 1 hour ago -
. A marketing researcher conducted a survey of 25 shoppers
randomly selected at the local mall...
asked 1 hour ago -
Create an comprehensive response to the
following:
Antimicrobial agents work on a multitude of microbes (bacteria,...
asked 1 hour ago -
6.13 LAB: Step counter. Section 6.3.
A pedometer treats walking 2,000 steps as walking 1 mile....
asked 1 hour ago -
(14.2) A block of mass m = 10 kg riding on a frictionless
horizontal plane is...
asked 1 hour ago -
Use any search engine to search for articles about Starbucks
partnership with Tata Companies in India...
asked 1 hour ago -
Let’s say that for some reason Bank Excess Reserves suddenly
increase sharply. What effect would this...
asked 1 hour ago -
Given:
Curent Assets: $600,000
Total Assets: $2,600,000
Current Liabilities: $500,000
Total Liabilities: $1,700,000
What is the...
asked 1 hour ago -
1. What is a “Bankster”? What is insider trading? Why is it
illegal?
2. What is...
asked 1 hour ago -
A transverse wave on a cord is given by
D(x,t)=0.18sin(2.7x−61.0t), where Dand x are in m...
asked 1 hour ago -
ASSIGNMENT
ANSWER ANY TWO OF THE FOLLOWING IN 2-3 PARAGRAPHS OF EACH
QUESTION.
1: Where is...
asked 1 hour ago