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On January 1, 2018, Primair Corporation loaned Vista Company $484,000 and agreed to guarantee all of Vista's long-term debt in exchange for (1) decision-making authority
On January 1, 2018, Primair Corporation loaned Vista Company $484,000 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 10 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 $120,000 while Vista's book value was $43,900. 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
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