Problem 6-27 (LO 6-2) On January 1, 2018, Primair Corporation loaned Vista Company $396,000 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, Primalr is the primary beneficiary of Vista (a variable Interest entity). Primair's loan to Vista stipulated a 8 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 $190,000 w $69,700. Any excess falr over book value at that date was attributed to Vista's trademark with an Indet Because Primair owns no equity In Vista, all of the acquisition-date excess falr over book value is allocated to the noncontrolling Interest. Vista pald 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 (823,500) 600, 100 76,200 (31,680) Vista (242,800) 96,800 32,200 31,680 (82,120) (178,880) (1,539, eee) (178,880) 262,400 (1,455,489) (54,700) (82,120) (136.820) 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 61,000 454, 109 396, eee 778, eee 640, 600 54,800 756,400 1,628,100 (122,620) (50, eee) (1,455,480) (1,628, 100) (21,900) (186,680) (396,000) (15, 000) (136,820) (756,400) 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 pald 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 accounts where multiple consolidation entrle are required, combine all debit entries Into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Amounts in the Debit and Credit columns should be entered as positive. Negative amounts for the NCI and Consolidated Totals columns should be entered with a minus sign.)
