Consolidating a VIE in a Subsequent Year

Pelican Mountain Resorts uses a financial entity to obtain secured debt. It sells customer timeshare agreements to the entity, who finances the purchases with debt secured by future collections on the timeshare agreements. On January 1, 2019, Pelican determines that the entity is a VIE and Pelican is its primary beneficiary. Pelican has no equity interest in the VIE. The VIEs balance sheet on that date is as follows:

Receivables	$4,000,000		Secured debt	$4,250,000
Other assets	500,000		Equity	250,000
Total assets	$4,500,000		Total debt & equity	$4,500,000

On January 1, 2019, the VIEs other assets are undervalued by $65,000 and it has previously unrecorded identifiable intangible assets of $1,000,000. The fair value of the VIE is $1,500,000.

It is now December 31, 2019, the end of the accounting year. The revalued other assets consist of equipment having a 5-year life, straight-line. The identifiable intangibles are impaired by $100,000. The goodwill is not impaired. The VIE reports net income of $125,000 for 2019.

Required

Prepare the eliminating entries required to consolidate the VIE with Pelican on December 31, 2019, assuming the VIE and Pelican are not under common control prior to Pelicans identification as the primary beneficiary.

Ref.	Description		Debit	Credit
(E)	AnswerEquity, beginningGoodwillImpairment lossNCI in incomeNoncontrolling interestOther assets		Answer	Answer
	AnswerEquity, beginningGoodwillImpairment lossNCI in incomeNoncontrolling interestOther assets		Answer	Answer
(R)	Other assets		Answer	Answer
	Identifiable intangibles		Answer	Answer
	AnswerEquity, beginningGoodwillImpairment lossNCI in incomeNoncontrolling interestOther assets		Answer	Answer
	AnswerEquity, beginningGoodwillImpairment lossNCI in incomeNoncontrolling interestOther assets		Answer	Answer
(O)	Depreciation expense		Answer	Answer
	AnswerEquity, beginningGoodwillImpairment lossNCI in incomeNoncontrolling interestOther assets		Answer	Answer
	AnswerEquity, beginningGoodwillImpairment lossNCI in incomeNoncontrolling interestOther assets		Answer	Answer
	Identifiable intangibles		Answer	Answer
(N)	AnswerEquity, beginningGoodwillImpairment lossNCI in incomeNoncontrolling interestOther assets		Answer	Answer
	AnswerEquity, beginningGoodwillImpairment lossNCI in incomeNoncontrolling interestOther assets		Answer	Answer