On January 1, 2018, Primair Corporation loaned Vista Company $428,000 and agreed to guarantee all of Vista's long-term debt in exchange for (1) decision-making authority over all of Vista's activities and (2) an annual cash payment of 25 percent of Vista's revenues. As a result of the agreement, Primair is the primary beneficiary of Vista (a variable interest entity). Primair's loan to Vista stipulated a 6 percent (market) rate of interest to be paid annually. On January 1, 2018, Primair estimated that the fair value of Vista's equity shares equaled $180,000 while Vista's book value was $65,900. Any excess fair over book value at that date was attributed to Vista's trademark with an indefinite life. Because Primair owns no equity in Vista, all of the acquisition-date excess fair over book value is allocated to the noncontrolling interest. Vista paid Primair 25 percent of its 2018 revenues at the end of the year. On December 31, 2018, Primair and Vista submitted the following statements for consolidation. Parentheses indicate credit balances. Primair (791,500) 576.900 73,400 (25,680) Vista (256,700) 102.300 34,100 (166,880) (1,507.000) (166,BBO) 244,800 (1,429,000) 25,600 (94,620) (50,900) (94,620) Revenues Cost of good sold Other operating expenses Interest income Interest expense Net income Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Current assets Loan receivable from Vista Equipment (net) Trademark Total assets Current liabilities Long-term debt Loan payable to Primair Common stock Retained earnings, 12/31 Total liabilities and equity (145,520) 70,300 445,900 428.000 746,000 1,619,900 (140,820) 738,300 63,200 871,800 (25300) (257,980 (428.000 (15,000) (145, 520) (871, 800) (50,000) (1,429,000) (1,619,900) In computing the amount of Vista's net income attributable to the noncontrolling interest, Vista's net income should be reduced by the 25% revenue allocation to Primair. Interest expense paid to Primair is not excluded from Vista's net income because it is a contractual distribution of Vista's net income to Primair. Prepare the December 31, 2018, consolidation worksheet for Primair and Vista. (For account are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheets combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in t Credit columns should be entered as positive. Negative amounts for the NCI and Consolidated Totals columns should with a minus sign.) Consolidated NCI Balances Revenues Cost of good sold Other operating expenses Interest income Interest expense Net Income Consolidated net income PRIMAIR AND VISTA Consolidation Worksheet Year Ended December 31, 2018 Consolidation Entries Primair Vista Debit Credit $ (791,500) S (256,700) 576,900 102,300 73.400 34,100 (25,680) 25,680 S (166,880) S (94,620) to noncontrolling interest to Primair Retained earnings, 1/1 Net income Dividends declared Retained earnings, 12/31 Current assets Loan receivable from Vista Equipment (net) Trademark Total assets Current liabilities Long-term debt Loan payable to Primair Common stock Noncontrolling interest Retained earnings, 12/31 Total liabilities and equity $ (1,507,000) S (50,900) (166,880) (94,620) 244.8000 $ (1,429,080) S (145,520) 445,900 S 70,300 428,000 746,000 738,300 63,200 1,619,900 $ 871,800 (140,820) (25,300) (257,980) (428,000) (50,000) (15,000) (1,429,080)| S (1,619,900) $ (145,520) (871,800)
