Pelican Mountain Resorts uses a financial entity to obtain secured debt. It sells customer timeshare agreements to the entity, who finances the purchases with debt secured by future collections on the timeshare agreements. On January 1, 2019, Pelican determines that the entity is a VIE and Pelican is its primary beneficiary. Pelican has no equity interest in the VIE. The VIE’s balance sheet on that date is as follows:

Receivables	$4,000,000		Secured debt	$4,250,000
Other assets	500,000		Equity	250,000
Total assets	$4,500,000		Total debt & equity	$4,500,000

On January 1, 2019, the VIE’s other assets are undervalued by $65,000 and it has previously unrecorded identifiable intangible assets of $1,000,000. The fair value of the VIE is $1,500,000.

Required

Prepare the eliminating entries required to consolidate the VIE with Pelican on January 1, 2019, assuming the VIE and Pelican are

a. already under common control.

A journal entry may not be required for either or both (E) and (R). If this applies, select "No entry" as the journal descriptions.

Ref.	Description	Debit	Credit
(E)	AnswerEquityGoodwillNoncontrolling interestNo entry	Answer	Answer
	AnswerEquityGoodwillNoncontrolling interestNo entry	Answer	Answer
(R)	AnswerEquityOther assetsNo entry	Answer	Answer
	AnswerEquityIdentifiable intangiblesNo entry	Answer	Answer
	AnswerEquityGoodwillNo entry	Answer	Answer
	AnswerEquityNoncontrolling interestNo entry	Answer	Answer

b. not under common control.

A journal entry may not be required for either or both (E) and (R). If this applies, select "No entry" as the journal descriptions.

Ref.	Description	Debit	Credit
(E)	AnswerEquityGoodwillNoncontrolling interestNo entry	Answer	Answer
	AnswerEquityGoodwillNoncontrolling interestNo entry	Answer	Answer
(R)	AnswerEquityOther assetsNo entry	Answer	Answer
	AnswerEquityIdentifiable intangiblesNo entry	Answer	Answer
	AnswerEquityGoodwillNo entry	Answer	Answer
	AnswerEquityNoncontrolling interestNo entry	Answer	Answer

Answer rating: 100% (QA)

To prepare for the deleting entries necessary to merge the VIE with Pelican on January 1 2019 two possibilities must be considered a already under com... View the full answer