Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Accounting questions

Question

Define the terms parent and subsidiary.

Answered: 1 week ago

Question

Explain the steps involved in training programmes.

Answered: 1 week ago

Question

What are the need and importance of training ?

Answered: 1 week ago

Question

What is job rotation ?

Answered: 1 week ago