Question

E5.4
Please explain the calculations!! Thank you!!

Consolidating a VIE at the Date of Acquisition Pelican Mountain Resorts uses a financial entity to obtain secured debt. It sells customer timeshare agreements to the entity, who finances the purchases with debt secured by future collections on the timeshare agreements. On January 1, 2019, Pelican deter- mines that the entity is a VIE and Pelican is its primary beneficiary. Pelican has no E5.4 equity interest in the VIE. The VIE's balance sheet on that date is as follows: $4,250,000 $4,000,000 Secured debt Receivables Equity.. 250,000 Other assets 500,000 Total debt & equity $4,500,000 $4,500,000 Total assets On January 1, 2019, the VIE's other assets are undervalued by $65,000 and it has previously unrecorded identifiable intangible assets of $1,000,000. The fair value of the VIE is $1,500,000 Required Prepare the eliminating entries required to consolidate the VIE with Pelican on January 1,2019, assuming the VIE and Pelican are already under common control. a. b. not under common control.

Answer 1

-AnacgC compofidale dhe eliminafing entais ined th pebian to he pelican on Jan , o19, ashuming the VIF) VE controf Albcady under Camman (a fon the depreciation f quiment, 435000 ofhen asebs 65000 Revalved 500000 Revalveol offen ascs- 4425000 436000 oo,000 Depresiotion 500,O00 81000 Pertialan DY Pepreciain ale 8 1000 ofther asels 8000

NO Contriof Not undun Common CY Paniculor PEL AfC l00,000 dentcalntang ble anck 4100,000 10