Chapter 6 Homework Suwa Help Save & Exit & Submit Check my work 4. 5.74 paints On January 1, 2021, Pikes Corporation loaned Venti Company $300,000 and agreed to guarantee all of Venti's long-term debt in exchange for (1) decision-making authority over all of Venti's activities and (2) an annual management fee of 25 percent of Venti's annual revenues. As a result of the agreement, Pikes becomes the primary beneficiary of Venti (now a variable interest entity). Pikes' loan to Venti stipulated a 7 percent (market) rate of interest to be paid annually with principal due in 10 years. On January 1, 2021, Pikes estimated that the fair value of Venti's equity shares equaled $75,000 while Venti's book value was $55,000. Any excess fair over book value at that date was attributed to Venti's trademark with an indefinite life. Because Pikes owns no equity in Venti, all of the acquisition-date excess fair over book value is allocated to the noncontrolling interest. Venti pald Plkes 25 percent of its 2021 revenues at the end of the year and recorded the payment in other operating expenses. Venti also paid the interest to Pikes for the loan. On December 31, 2021, Pikes and Venti submitted the following statements for consolidation. (Parentheses indicate credit balances. Ask Pikes $ (792,880) 154,890) 621,990 76,880 121,880) Venti $ (216,990 0 89,900 64,890 Print References 39,000 124,900 140,000) 124,4001 Revenues Managerrent fer Cost of good sald Other operating expenses Interest income Interest expense Net incone Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Current assets Loan receivable fron Venti Enuipment (net) Trademark Total assets Current liabilities Loan payable to Pikes Other long term debt Corrnon stock Retained earnings, 12/31 Total liabilities and equity (178, 898) 11,388,880) (170,890) 75,880 11,475,880 360,880 380,880 895, 890 1,555, 880 (30,000) 6 . 164,8901 73,000 527,900 125,00 725,000 192,3801 (380,000 (254,4001 (15,8001 164,000) $ (725,968 (50,880) 11,475,880) $11,555, 840) Prepare the December 31, 2021, consolidation worksheet for Pikes and its variable interest entity Venti. (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. Input all amounts as positive values.) Piker und Monti romaniar Chapter 6 Homework we Help Save & Exit Submit Check my work 4 r' , the worksheet. Input all amounts as positive values.) 5.74 points NCI Consolidated Balances S 1,008,000 s Pikes and Venti Companies Consolidation Worksheet Year Ended December 31, 2021 Consolidation Entries Pikes Venti Debit Credit 792,000 $ 216.000 54,000 D 621.000 99,000 75,000 64,000 12,500 21.000 0 a 39,000 170,000 $ 24,000 Revenues Management fee Cost of good sold Other operating expenses Interest income Interest expense 710,000 Ask Print Net incorre S S 299,000 References S 298,000 S 40.000 24,000 S S 0 S Consolidated net income to noncontrolling Interest to Pkes Retained eamings, 1/1 Nat income Dividends declared Retained earings, 12/31 Current assets Loan recalvable from Venti Equipment (net) Trademark Total assets Current liablities Loan payable to Pikes Other long-term debt Common stock Noncontrolling interest Retained camnings, 12/31 Total liabilities and equity 1,380.000 $ 170,000 75.000 1,475.000 $ 360 000 $ 300.000 895.000 0 0 1,565.000 $ 30 000 254.000 D 84.000 73.000 0 527,000 125,000 725,000 92.000 300.000 254,000 125,000 S S 0 0 254,000 15,000 5000 15 000 D 204,000 0 1.475.000 1,565.00 $ 84.000 0 84.000 470,500 S 725,000 458.000 S 0