im stuck on number 4 only. i already got the first 3 question done
Case 16-6 Closely Associated Cars
JV, a corporation, was formed in 20X9 to design and manufacture electric cars. JV is 60 percent owned by AutoCo (a car manufacturer) and 40 percent owned by ElectricCo (a developer of electric car technology). The decision-making authority of JV is equally shared between AutoCo and ElectricCo: the JV board of directors is composed of two members appointed by AutoCo and two members appointed by ElectricCo. JVs board of directors (1) sets the annual budgets; (2) is responsible for the hiring, firing, and compensation of management; and (3) approves all material contracts. As part of the agreement, all cars produced by JV will bear AutoCos logo and will be sold at AutoCobranded auto dealers.
AutoCo is an established car manufacturer that has been producing cars in the United States for the past century. To meet governmental mandates of lowering emissions and increasing the fuel economy of its fleet, AutoCo has been evaluating various ways to enter the electric vehicle market. AutoCo does not currently have viable technology for the production of electric cars.
ElectricCo was established by professors that developed cutting-edge battery technology for electric cars. Although ElectricCo has not produced electric cars in a mass market, the battery technology is tested and highly valued.
AutoCo and ElectricCo jointly formed JV to produce electric cars for the mass market. JV benefits from ElectricCos proprietary technology and AutoCos manufacturing expertise and access to credit markets and distribution channels.
JV is financed with 30 percent equity and 70 percent debt. When JV was formed, ElectricCo did not have access to sufficient cash at inception to fund its equity interest. To purchase its equity interest, ElectricCo received a loan from AutoCo. The debt financing was obtained in the form of a credit facility from a third-party bank. For the bank to provide debt to JV, it required that AutoCo guarantee the loan.
Required:
1. Is JV a variable interest entity (VIE)?
2. Which entity, if any, should consolidate JV?
3. Whats the implications of ASU 2018-17 if all parties are private entities?
4. Whats accounting look like for all entities at the day of formation? Provide your
rationales how you figure out the high-level entries.
i only need help on number 4 i already answer the first 3 questions
T-Mobile 10:26 PM 100% Case 16-6.pdf Case 16-6 Closely Associated Cars JV, a corporation was formed in 2009 u design and manufacture electric cars. JV is 60 percent owned by AutoCe a car manufacturer) and 40 percent owned by Electrico developer of electric car technology The decision-making authority of Visually shared between AutoCo and Electrica the board of directors is composed of two members appointed by Am. and two members appointed by Electro Vband of directors (1) sets the annual budget (2) is responsible for the hiring firing, and compression of management, and (3) approves all material contracts. As part of the agreement, all cars produced by JV will be AutoCo's logo and will be sold Autokobranded to dealer Au Cois established car manufacturer that has been producing cars in the United States for the past century. To meet governmental mandates of lowering emas and increasing the fuel economy of its flot, Autocols bom evaluating various ways to enter the electric chicle market. Auteco does not currently have viahle schnology for the production of electric cars Electricco w established by professors that developed cutting-edge battery technology for electric cars. Although Electric has not produced electric cars in a mass market, the battery technology is tested and highly valued Autoo and Electrice jointly fomed JV to produce electric cars for the mass market benefits from ElectricCo's proprietary technology and AutoCo's manufacturing expertise and weess to credit markets and distribution channels W is financed with 30 percent equity and 70 percent dot. When I was formed, Electricco did not have access to sufficient cash at inception to fund its equity interest To purchase its equity interest. Electrico received a loan from Auto The det Financing was obtained in the form of a credit facility from a third-party bank. For the bank to provide debt to IV. it required that AutoCo purate the bo Required: 1. Is JV variable interesentity (VIET 2. Which entity, if any, should consolidate V? 3. What's the implications of ASU 2018-17 if all parties are private entines? # What's accounting look like for lentities at the day of formation Provide your rationales how you figure out the high-level tries Case 16-6 Closely Associated Cars JV, a corporation, was formed in 20x9 to design and manufacture electric cars. J is 60 percent owned by AutoCo (a car manufacturer) and 40 percent owned by Electric Co (a developer of electric car technology). The decision-making authority of JV is equally shared between AutoCo and Electric Coc the JV board of directors is composed of two members appointed by AutoCo and two members appointed by Electric Co. JV's board of directors (1) sets the annual budgets; (2) is responsible for the hiring, firing, and compensation of management, and (3) approves all material contracts. As part of the agreement, all cars produced by JV will bear AutoCo's logo and will be sold at AutoCobranded auto dealers AutoCo is an established car manufacturer that has been producing cars in the United States for the past century. To meet yovernmental mandates of lowering emissions and increasing the fuel economy of its fleet, AutoCo has been evaluating various ways to enter the electric vehicle market. AutoCo does not currently have viable technology for the production of electric cars. ElectricCo was established by professors that developed cutting-edge battery technology for electric cars. Although Electric Co has not produced clectric cars in a mass market, the battery technology is tested and highly valued. AutoCo and ElectricCo jointly formed JV to produce electric cars for the mass market. JV benefits from ElectricCo's proprietary technology and AutoCo's manufacturing expertise and access to credit markets and distribution channels. JV is financed with 30 percent equity and 70 percent debt. When JV was formed, Electrico did not have access to sufficient cash at inception to fund its cquity interest To purchase its equity interest, ElectricCo received a loan from AutoCo. The debt financing was obtained in the form of a credit facility from a third-party bank. For the bank to provide debt to JV, it required that AutoCo guarantee the loan Required: 1. Is JV a variable interest entity (VIE)? 2. Which entity, if any, should consolidate JV? 3. What's the implications of ASU 2018-17 if all parties are private entities? 4. What's accounting look like for all entities at the day of formation? Provide your rationales how you figure out the high-level entries T-Mobile 10:26 PM 100% Case 16-6.pdf Case 16-6 Closely Associated Cars JV, a corporation was formed in 2009 u design and manufacture electric cars. JV is 60 percent owned by AutoCe a car manufacturer) and 40 percent owned by Electrico developer of electric car technology The decision-making authority of Visually shared between AutoCo and Electrica the board of directors is composed of two members appointed by Am. and two members appointed by Electro Vband of directors (1) sets the annual budget (2) is responsible for the hiring firing, and compression of management, and (3) approves all material contracts. As part of the agreement, all cars produced by JV will be AutoCo's logo and will be sold Autokobranded to dealer Au Cois established car manufacturer that has been producing cars in the United States for the past century. To meet governmental mandates of lowering emas and increasing the fuel economy of its flot, Autocols bom evaluating various ways to enter the electric chicle market. Auteco does not currently have viahle schnology for the production of electric cars Electricco w established by professors that developed cutting-edge battery technology for electric cars. Although Electric has not produced electric cars in a mass market, the battery technology is tested and highly valued Autoo and Electrice jointly fomed JV to produce electric cars for the mass market benefits from ElectricCo's proprietary technology and AutoCo's manufacturing expertise and weess to credit markets and distribution channels W is financed with 30 percent equity and 70 percent dot. When I was formed, Electricco did not have access to sufficient cash at inception to fund its equity interest To purchase its equity interest. Electrico received a loan from Auto The det Financing was obtained in the form of a credit facility from a third-party bank. For the bank to provide debt to IV. it required that AutoCo purate the bo Required: 1. Is JV variable interesentity (VIET 2. Which entity, if any, should consolidate V? 3. What's the implications of ASU 2018-17 if all parties are private entines? # What's accounting look like for lentities at the day of formation Provide your rationales how you figure out the high-level tries Case 16-6 Closely Associated Cars JV, a corporation, was formed in 20x9 to design and manufacture electric cars. J is 60 percent owned by AutoCo (a car manufacturer) and 40 percent owned by Electric Co (a developer of electric car technology). The decision-making authority of JV is equally shared between AutoCo and Electric Coc the JV board of directors is composed of two members appointed by AutoCo and two members appointed by Electric Co. JV's board of directors (1) sets the annual budgets; (2) is responsible for the hiring, firing, and compensation of management, and (3) approves all material contracts. As part of the agreement, all cars produced by JV will bear AutoCo's logo and will be sold at AutoCobranded auto dealers AutoCo is an established car manufacturer that has been producing cars in the United States for the past century. To meet yovernmental mandates of lowering emissions and increasing the fuel economy of its fleet, AutoCo has been evaluating various ways to enter the electric vehicle market. AutoCo does not currently have viable technology for the production of electric cars. ElectricCo was established by professors that developed cutting-edge battery technology for electric cars. Although Electric Co has not produced clectric cars in a mass market, the battery technology is tested and highly valued. AutoCo and ElectricCo jointly formed JV to produce electric cars for the mass market. JV benefits from ElectricCo's proprietary technology and AutoCo's manufacturing expertise and access to credit markets and distribution channels. JV is financed with 30 percent equity and 70 percent debt. When JV was formed, Electrico did not have access to sufficient cash at inception to fund its cquity interest To purchase its equity interest, ElectricCo received a loan from AutoCo. The debt financing was obtained in the form of a credit facility from a third-party bank. For the bank to provide debt to JV, it required that AutoCo guarantee the loan Required: 1. Is JV a variable interest entity (VIE)? 2. Which entity, if any, should consolidate JV? 3. What's the implications of ASU 2018-17 if all parties are private entities? 4. What's accounting look like for all entities at the day of formation? Provide your rationales how you figure out the high-level entries
