On January 1, 2014, 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 Connect’s 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 Connect’s 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:

Each of the above amounts represents a fair value at January 1, 2014. The fair value of the 60 percent of Net Connect shares not owned by Access IT was $1,500,000. Prepare an acquisition-date consolidated worksheet for Access IT and its variable interestentity.

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Access IT Net Connect Cash Investment in Net Connect. Capitalized software. Computer equipment Communications equipment. Patent S 61,000 S 41,000 1,000,000 981,000 1,066,000 916,000 .. 156,000 56,000 336,000 191,000 780,000 (616,000) . .. 4,024,000 (941,000) (2,660,000) Total assets Long-term debt Common stock-Access IT Common stock-Net Connect . . . . . Retained earnings (423,000) $(4,024,000) (41,000) (123,000) $(780,000) Total liabilities and equity.