Question

On January 1, 2018, Access IT Company exchanged $890,000 for 40 percent of the outstanding voting...

On January 1, 2018, Access IT Company exchanged $890,000 for 40 percent of the outstanding voting stock of Net Connect. Especially attractive to Access IT was a research project underway at Net Connect that would enhance both the speed and quantity of client-accessible data. Although not recorded in Net Connect's financial records, the fair value of the research project was considered to be $1,850,000. In contractual agreements with the sole owner of the remaining 60 percent of Net Connect, Access IT was granted (1) various decision-making rights over Net Connect's operating decisions and (2) special service purchase provisions at below-market rates. As a result of these contractual agreements, Access IT established itself as the primary beneficiary of Net Connect. Immediately after the purchase, Access IT and Net Connect presented the following balance sheets: Access IT Net Connect Cash $ 50,000 $ 30,000 Investment in Net Connect 890,000 Capitalized software 970,000 145,000 Computer equipment 1,055,000 45,000 Communications equipment 905,000 325,000 Patent 180,000 Total assets $ 3,870,000 $ 725,000 Long-term debt $ (930,000 ) $ (605,000 ) Common stock-Access IT (2,550,000 ) Common stock-Net Connect (30,000 ) Retained earnings (390,000 ) (90,000 ) Total liabilities and equity $ (3,870,000 ) $ (725,000 ) Each of the above amounts represents a fair value at January 1, 2018. The fair value of the 60 percent of Net Connect shares not owned by Access IT was $1,335,000. Prepare an acquisition-date consolidated worksheet for Access IT and its variable interest entity. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the NCI and Consolidated Totals columns should be entered with a minus sign.)

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1,...
Padre, Inc., buys 80 percent of the outstanding common stock of Sierra Corporation on January 1, 2018, for $771,840 cash. At the acquisition date, Sierra’s total fair value, including the noncontrolling interest, was assessed at $964,800 although Sierra’s book value was only $609,000. Also, several individual items on Sierra’s financial records had fair values that differed from their book values as follows: Book Value Fair Value Land $ 68,400 $ 300,400 Buildings and equipment (10-year remaining life) 322,000 293,000 Copyright...
On January 1, 2018 Casey Corporation exchanged $3,298,000 cash for 100 percent of the outstanding voting...
On January 1, 2018 Casey Corporation exchanged $3,298,000 cash for 100 percent of the outstanding voting stock of Kennedy Corporation. Casey plans to maintain Kennedy as a wholly owned subsidiary with separate legal status and accounting information systems. At the acquisition date, Casey prepared the following fair-value allocation schedule: Fair value of Kennedy (consideration transferred) $ 3,298,000 Carrying amount acquired 2,600,000 Excess fair value $ 698,000 to buildings (undervalued) $ 329,000 to licensing agreements (overvalued) (106,000 ) 223,000 to goodwill...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $93,800....
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $93,800. At that date, the fair value of the noncontrolling interest was $40,200. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Phone Smart Item Corporation Corporation Cash $ 59,300 $ 24,000 Accounts Receivable 91,000 53,000 Inventory 130,000 78,000 Land 62,000 39,000 Buildings & Equipment 410,000 253,000 Less: Accumulated Depreciation (151,000 ) (74,000 ) Investment...
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000....
Phone Corporation acquired 70 percent of Smart Corporation’s common stock on December 31, 20X4, for $98,000. At that date, the fair value of the noncontrolling interest was $42,000. Data from the balance sheets of the two companies included the following amounts as of the date of acquisition: Phone Smart Item Corporation Corporation Cash $ 62,300 $ 21,000 Accounts Receivable 95,000 51,000 Inventory 136,000 90,000 Land 71,000 39,000 Buildings & Equipment 425,000 254,000 Less: Accumulated Depreciation (162,000 ) (79,000 ) Investment...
On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange...
On July 1, 2018, Truman Company acquired a 70 percent interest in Atlanta Company in exchange for consideration of $788,900 in cash and equity securities. The remaining 30 percent of Atlanta’s shares traded closely near an average price that totaled $338,100 both before and after Truman’s acquisition. In reviewing its acquisition, Truman assigned a $129,500 fair value to a patent recently developed by Atlanta, even though it was not recorded within the financial records of the subsidiary. This patent is...
Pie Corporation acquired 75 percent of Slice Company’s ownership on January 1, 20X8, for $96,000. At...
Pie Corporation acquired 75 percent of Slice Company’s ownership on January 1, 20X8, for $96,000. At that date, the fair value of the noncontrolling interest was $32,000. The book value of Slice’s net assets at acquisition was $100,000. The book values and fair values of Slice’s assets and liabilities were equal, except for Slice’s buildings and equipment, which were worth $20,000 more than book value. Accumulated depreciation on the buildings and equipment was $30,000 on the acquisition date. Buildings and...
On January 1, 2015, NewTune Company exchanges 17,496 shares of its common stock for all of...
On January 1, 2015, NewTune Company exchanges 17,496 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune’s shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go’s fair value. NewTune also paid $31,250 in stock registration and issuance costs in connection with the merger.      Several of On-the-Go’s accounts fair values differ from their book values on...
On January 1, NewTune Company exchanges 17,808 shares of its common stock for all of the...
On January 1, NewTune Company exchanges 17,808 shares of its common stock for all of the outstanding shares of On-the-Go, Inc. Each of NewTune’s shares has a $4 par value and a $50 fair value. The fair value of the stock exchanged in the acquisition was considered equal to On-the-Go’s fair value. NewTune also paid $36,900 in stock registration and issuance costs in connection with the merger. Several of On-the-Go’s accounts’ fair values differ from their book values on this...
Pavin acquires all of Stabler’s outstanding shares on January 1, 2015, for $550,000 in cash. Of...
Pavin acquires all of Stabler’s outstanding shares on January 1, 2015, for $550,000 in cash. Of this amount, $39,000 was attributed to equipment with a 10-year remaining life and $49,000 was assigned to trademarks expensed over a 20-year period. Pavin applies the partial equity method so that income is accrued each period based solely on the earnings reported by the subsidiary. On January 1, 2018, Pavin reports $390,000 in bonds outstanding with a carrying amount of $366,000. Stabler purchases half...
Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of...
Giant acquired all of Small’s common stock on January 1, 2014, in exchange for cash of $770,000. On that day, Small reported common stock of $170,000 and retained earnings of $400,000. At the acquisition date, $75,500 of the fair-value price was attributed to undervalued land while $52,000 was assigned to undervalued equipment having a 10-year remaining life. The $72,500 unallocated portion of the acquisition-date excess fair value over book value was viewed as goodwill. Over the next few years, Giant...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT