2 questions on excel

It is now June 19, 2020. You, CPA, have just been hired as the accounting manager for Avalanche Corporation ("Avalanche"). Avalanche is a Canadian public company that is focussed on environmental consulting solutions. The CEO of Avalanche has received a lot of pressure by the board of directors, as net income has been fluctuating significantly over the last few years. The CEO prefers to show a more stable net income in the upcoming years. The financial statements of Avalanche have been completed for the year ended March 31, 2020, except for the accounting surrounding its purchase of the shares of Cloud Corporation ("Cloud"). The CEO of Avalanche would like to hold the shares of Cloud for several years. Investment in Cloud Corporation On April 1, 2019, Avalanche bought 22% of the shares of a small private company named Cloud Corporation ("Cloud"). Avalanche paid $10,000,000 for 250,000 Cloud shares. Cloud has built leading software to assist with environmental consulting services. Avalanche is hoping to utilize Cloud's software within its own consulting services. 60% of Cloud's shares are owned by a private equity firm - Barrett Capital Inc (BCI). BCI holds a majority of the board seats and will not allow Avalanche to have any seats on the board. Avalanche is only allowed to attend the annual general meeting during the year and has no interaction with the management of Cloud other than that. Cloud recorded a profit of $1,000,000 from April 1, 2019 to March 31, 2020. An independent valuator has estimated that the market value of each Cloud share is approximately $50 per share. Cloud declared and paid dividends of $2.50 per share in the month of June 2019. Required: The accounting for the Cloud Corporation ("Cloud") transaction has not been started. Please provide the relevant accounting treatment for this transaction. If there are options available for the accounting treatment, please describe what they are and which one you would recommend. Your discussions should use the case facts and the appropriate technical accounting guidance and should be quantified when possible. O e W XPOTUS Corp. purchased 100% of Space Force Corp. on January 1, 2020 for the following consideration: $10,000,000 of cash . 1,000,000 POTUS Corp. shares that have a 1-year trading restriction. Each of these restricted shares were estimated to have a fair value of $5. An additional $500,000 of cash if certain income targets are met in 2020 and 2021. If the income targets are met, the additional payout will be made on December 31, 2021. POTUS Corp. believes there is a 40% chance this payout will have to be made. Land that POTUS Corp. purchased in 2017 at a price of $1,500,000. An appraisal of the land was complete on January 1, 2020 that valued the land at $2,500,000 Required (Assume no discounting/discount rates) I A) Calculate the purchase price of the acquisition of Space Force Corp. as at January 1, 2020. (3 Points) B) If the restriction was removed on the 1,000,000 POTUS Corp. shares, would this increase or decrease the purchase price? Please explain in 1-2 sentences. (1 Point) C) Which of the above consideration would qualify as contingent consideration? (0.5 Points) 11) Would the contingent consideration be recorded as liability or equity on the date of the acquisition? Please explain in 1-2 sentences. (1.5 Points) 111) Please explain the difference on how you account for contingent consideration that qualifies as a liability, compared to contingent consideration that qualifies as equity after the date of the acquisition. (2 Points) D) As at December 31, 2020, POTUS Corp. believes that the probability of payout of the $500,000 of cash has increased to a 75% chance. Please provide the journal entry that would need to be recorded on December 31, 2020. (2 Points) O e 9 W X