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27. On January 1, 2018, Primair Corporation loaned Vista Company $300,000 and agreed to guaran- tee all of Vista's long-term debt in exchange for (1)

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27. On January 1, 2018, Primair Corporation loaned Vista Company $300,000 and agreed to guaran- tee all of Vista's long-term debt in exchange for (1) decision-making authority over all of Vista's activities and (2) an annual cash payment of 25 percent of Vista's revenues. As a result of the agree- ment, Primair is the primary beneficiary of Vista (a variable interest entity). Primair's loan to Vista stipulated a 7 percent (market) rate of interest to be paid annually. On January 1, 2018, Primair estimated that the fair value of Vista's equity shares equaled S150.000 while Vista's book value was $33,000. Any excess fair over book value at that date was attributed to Vista's trademark with an indefinite life. Because Primair owns no equity in Vista, all of the acquisition-date excess fair over book value is allocated to the non-controlling interest. Vista paid Primair 25 percent of its 2018 revenues at the end of the year. On December 31, 2018, Primair and Vista submitted the following statements for consolidation. Parentheses indicate credit balances Revenues .................................... Cost of good sold...... Other operating expenses ...... Interest income ........ Interest expense........ Net income........... Primair (839,500) 612,000 78,000 (21,000) -0- (170,500) Vista (188,000) 75,000 25.000 -0- 21.000 (67.000) (40,000) (67.000) Retained earnings, 1/1..... Net income Dividends declared.......... Retained earnings, 12/31 .......... (1.555.000) (170,500) 250,000 (1.475,500) (107.000 50,000 Current assets Loan receivable from Vista. Equipment (net) Trademark .......... Total assets ............ 460,500 300.000 794,000 -0- 1,554,500 525.000 45.000 620.000 (29.000) -0- Current liabilities Long-term debt............. Loan payable to Primair........ Common stock ............... Retained earnings, 12/31 ......... Total liabilities and equity (50,000) (1.475,500) (1,554,500) (18.000) (180,000) (300,000) (15,000) (107.000) (620,000 In computing the amount of Vista's net income attributable to the non-controlling interest, Vista's net income should be reduced by the 25% revenue allocation to Primair. Interest expense paid to Primair is not excluded from Vista's net income because it is a contrac tual distribution of Vista's net income to Primair. Prepare the December 31, 2018, consolidation worksheet for Primair and Vista

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