ACC 422 Research Case: Equity Investment Tiger Tech, Inc. is an early stage private entity that is developing some promising technology Year At the end of Year 1, a group of investors get together and invest in Tiger Tech. As part of the transaction, Hunter Company invests $15 million for 15,000 Tiger Tech common shares at $1,000 per share. At the conclusion of the transaction, Tiger Tech has 100,000 common shares outstanding and an impliedsregate equity value of S100 million at $1,000 per share. Hunter holds a 15% interest in Tiger Tech Year 2 Early in Year 2, because it needs more capital to fund its anticipated product marketing efforts, Tiger Techselts 50,000 newly issued common shares M $1,200 per share to Dragon, Inc. for $60 million. These shares have rights identical to the existing Tiger Tech common shares Because Tiger Tech common shares are not publicly traded Hunter's investment in Tiger Tech does not have readily determinable fair value. Therefore, Hunter elects ASC 820-10-15-59, which permits Hunter for Tiger Tech's implied aggregate equity value when estimating the fale value of the equity investment For Year 2. Tiger Tech reports net loss of $ 10 million. Tiger Tech does not pay cash dividends Year 3 In Year 3, Hunter purchases additional 15,000 Tiper Techmon shares 51,200 per share from another only investor. Further, Hunter's CEO becomes a member on the Board of Directors Tiger Tech and participates in the business decision-making processes of Tiger Tech For Year 3. Tiger Toch reports net income or simillion Tiger Tech does not pay cash dividends Required: I Answer the following questions related to Hunter's investment in Tiger Tech Hunter does not elect the fair value option 1. Prepare the journal entry for Hunter at the end of Year I for its initial investment. What is the effect of the initial investment on Hunter's balance sheet, income statement and Matement of cash flow 2. (1) What is the implied agregate equity value of TigerTech in Year 2 bed on its transaction with Dragon, Inc.? What is the ownership percentage of Hunter in Tiger Tech at the conclusion of this transaction? (More Implied agregate equity value for private compani Malcommon shares outline Spice persons similar to market value for publicly trade.com) (2) What accounting approach should Hunter use to its investment in TigerTech in Your 27 Prepare the journal entry for Hunter in Year 2 3. (1) What is the ownership percentage of Hunter in TigerTech at the conclusion of its sure purchase in You 37 (2) What accounting approach should Hunter use to moure its investment in Tiger Toch in Year 3? Prepare all necessary journal entries for Hunter in Yew. When were his question, review ASC 321-10-15-3 through 15-3, and ASC 323-10-154 ACC 422 Research Case: Equity Investment Tiger Tech, Inc. is an early stage private entity that is developing some promising technology Year At the end of Year 1, a group of investors get together and invest in Tiger Tech. As part of the transaction, Hunter Company invests $15 million for 15,000 Tiger Tech common shares at $1,000 per share. At the conclusion of the transaction, Tiger Tech has 100,000 common shares outstanding and an impliedsregate equity value of S100 million at $1,000 per share. Hunter holds a 15% interest in Tiger Tech Year 2 Early in Year 2, because it needs more capital to fund its anticipated product marketing efforts, Tiger Techselts 50,000 newly issued common shares M $1,200 per share to Dragon, Inc. for $60 million. These shares have rights identical to the existing Tiger Tech common shares Because Tiger Tech common shares are not publicly traded Hunter's investment in Tiger Tech does not have readily determinable fair value. Therefore, Hunter elects ASC 820-10-15-59, which permits Hunter for Tiger Tech's implied aggregate equity value when estimating the fale value of the equity investment For Year 2. Tiger Tech reports net loss of $ 10 million. Tiger Tech does not pay cash dividends Year 3 In Year 3, Hunter purchases additional 15,000 Tiper Techmon shares 51,200 per share from another only investor. Further, Hunter's CEO becomes a member on the Board of Directors Tiger Tech and participates in the business decision-making processes of Tiger Tech For Year 3. Tiger Toch reports net income or simillion Tiger Tech does not pay cash dividends Required: I Answer the following questions related to Hunter's investment in Tiger Tech Hunter does not elect the fair value option 1. Prepare the journal entry for Hunter at the end of Year I for its initial investment. What is the effect of the initial investment on Hunter's balance sheet, income statement and Matement of cash flow 2. (1) What is the implied agregate equity value of TigerTech in Year 2 bed on its transaction with Dragon, Inc.? What is the ownership percentage of Hunter in Tiger Tech at the conclusion of this transaction? (More Implied agregate equity value for private compani Malcommon shares outline Spice persons similar to market value for publicly trade.com) (2) What accounting approach should Hunter use to its investment in TigerTech in Your 27 Prepare the journal entry for Hunter in Year 2 3. (1) What is the ownership percentage of Hunter in TigerTech at the conclusion of its sure purchase in You 37 (2) What accounting approach should Hunter use to moure its investment in Tiger Toch in Year 3? Prepare all necessary journal entries for Hunter in Yew. When were his question, review ASC 321-10-15-3 through 15-3, and ASC 323-10-154
