The Primary Company and the VIE Company had the balance sheet shown in Problem SA2-1 above on the date control was achieved. The Primary Company guaranteed the 5% bond payable issued by the VIE Company. The Primary Company also loaned the VIE Company $300,000 on a subordinated note at 10% annual interest.
The fair value of the VIE Company's assets (without deduction for debt) is $870,000. Equipment, with a 5 year life is $50,000 greater than book value.
The VIE company will pay 10% annual interest to the Primary Company on the intercompany loan. The VIE will also pay a fee of 5% on its sales revenue to the Primary Company.
The Primary Company and the VIE Company had the following trail balances on December 31, 2016:

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1. Prepare a determination and distribution of excess schedule for the schedule. (If problem SA12-1 was completed, the same schedule applies).
2. Prepare a consolidate worksheet for the Primary and VIE Companies as of December 31, 2016. Include the income distribution schedules?

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Trial Balances, Dec. 31, 2016 Primary Company VIE Company 110,000 425,000 Accounts receivable . Loan receivable from VIE Co. Land 300,000 Trial Balances, Dec. 31, 2016 Com Pri VIE Com Building Accumulated depreciation Equipment.... Accumulated depreciation Accounts payable Loan from Primary Company 6% Bond Payable Common stock, $1 par-Primary Co Paid in capitalin excess of par Primary Retained earnings Primary Co Common stock, $1 par-VIE Co. 500,000 (175,000) 400,000 (100,000) 360,000 90,000) 30,000 300,000 400,000 100,000 900,000 570,000 Co 10,000 50,000 20,000 220,000 5,000 20,000 in capital in excess of par VIE Co. . Retained earnings VIE Co. 800,000 30,000 Processing revenue Depreciation expense . Selling expenses Administrative expense 500,000 75,000 90,000 60,000 133,000 30,000 20,000 3,000 34,000 2,430,000 2,430,000 1,025,000 1,025,000