Question
On December 31, 2020, Petra Company invests $33,000 in Valery, a variable interest entity. In contractual agreements completed on that date, Petra established itself as
On December 31, 2020, Petra Company invests $33,000 in Valery, a variable interest entity. In contractual agreements completed on that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately after Petras investment, Valery presents the following balance sheet:
Cash $ 33,000
Long-term debt $ 107,000
Marketing software 153,000
Noncontrolling interest 99,000
Computer equipment 53,000
Petra equity interest 33,000
Total assets $ 239,000
Total liabilities and equity $ 239,000
Each of the amounts represents an assessed fair value at December 31, 2020, except for the marketing software. The December 31 business fair value of Valery is assessed at $132,000.
If the carrying amount of the marketing software was undervalued by $38,000, what amounts for Valery would appear in Petras December 31, 2020, consolidated financial statements?
If the carrying amount of the marketing software was overvalued by $38,000, what amounts for Valery would appear in Petras December 31, 2020, consolidated financial statements?
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Auditing and Assurance Services A Systematic Approach
Authors: William Messier, Steven Glover, Douglas Prawitt
9th edition
1308361491, 77862333, 978-1259248290, 9780077862336, 1259162346, 978-1259162343
