On January 1, 2021, Access IT Company exchanged $1,000,000 for 40 percent of the outstanding voting stock of Net Connect. Especially attractive to Access IT was a research project underway at Net Connect that would enhance both the speed and quantity of client-accessible data. Although not recorded in Net Connects financial records, the fair value of the research project was considered to be $1,960,000. In contractual agreements with the sole owner of the remaining 60 percent of Net Connect, Access IT was granted (1) various decision-making rights over Net Connects operating decisions and (2) special service purchase provisions at below-market rates. As a result of these contractual agreements, Access IT established itself as the primary beneficiary of Net Connect. Immediately after the purchase, Access IT and Net Connect presented the following balance sheets: (Note: Parentheses indicate credit balances.) Access IT Net Connect Cash $ 61,000 $ 41,000 Investment in Net Connect 1,000,000 Capitalized software 981,000 156,000 Computer equipment 1,066,000 56,000 Communications equipment 916,000 336,000 Patent 191,000 Total assets $ 4,024,000 $ 780,000 Long-term debt $ (941,000 ) $ (616,000 ) Common stockAccess IT (2,660,000 ) Common stockNet Connect (41,000 ) Retained earnings (423,000 ) (123,000 ) Total liabilities and equity $ (4,024,000 ) $ (780,000 ) Each of the above amounts represents a fair value at January 1, 2021. The fair value of the 60 percent of Net Connect shares not owned by Access IT was estimated at $1,500,000.

NCI Consolidated Balances $ 102,000 0 Cash Investment in Net Connect Capitalized software Computer equipment Communications equipment Research and development asset Patent Goodwill Total assets Long-term debt Common stockAccess IT Common stockNet Connect Retained earnings Noncontrolling interest Total liabilities and equity Consolidation Worksheet At January 1, 2021 Consolidation Entries Access IT Net Connect Debit Credit $ 61,000 $ 41,000 1,000,000 1,000,000 981,000 156,000 1,066,000 56,000 916,000 336,000 1,960,000 191,000 376,000 $ 4,024,000 $ 780,000 $ (941,000) $ (616,000) (2,660,000) 16,400 (41,000) 49,200 (423,000) (123,000) (1,401,600) $ (4,024,000) $ (780,000) $ 2,401,600 (401,600) 1,137,000 1,122,000 1,252,000 1,960,000 191,000 376,000 $ 6,140,000 $ (1,557,000)| (2,660,000) 24,600 73,800 1,401,600 (423,000) (1,500,000) $ 6,140,000)