Project: Consolidated Balance Sheet of and Acquisition-date consolidation worksheet for a parent and a variable interest...

  

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Project: Consolidated Balance Sheet of and Acquisition-date consolidation worksheet for a parent and a variable interest entity' On January 1, 2021, Jake Corp. exchanged $850,000 for 40% of the out standing voting stock of Johnson Corp. Especially attractive to Jake Corp was a research project underway Johnson Corp that would enhance both quality and quantity of Chip production. Although not recorded in Johnson Corp's financial records, the fair value of the research project was considered to be $1,810,000. In contractual Agreements with the sole owner of the remaining 60% of the Johnson Corp., Jake Corp. was granted: 1. Various decision-making rights over Johnson Corp.'s operating decisions 2. Special service purchase provisions at below-market rates. As a result of these contractual; agreements, Jake Corp established itself as the primary beneficiary of Johnson Corp. Immediately after the purchase, Jake Corp. and Johnson Corp presented the following balance sheets: Jake Corp. 46,000 850,000 966,000 1,051,000 901,000 Johnson Corp. $4 26,000 Cash Investment in Johnson Corp Capitalized Chip production software Computer equipment Communication Equipment 141,000 41,000 321,000 176,000 705,000 Patent Total Assets $ 3,814,000 Long-term Debt Common Stock-Jake $ (926,000) (2,510,000) (601,000) Common Stock-Johnson Retained Earnings Total liabilities and equity (378,000) $ (3,814,000) (26,000) (78,000 (705,000) (Note: Parentheses indicate Credit balance) Each of the above amounts represents a fair value at January 1, 2021. The fair value of the 60% percent of Johnson Corp shares not owned by Jake Corp was estimated at $1,275,000 Requirement: 1. Compute the Goodwill resulted from the purchase 2. Prepare an acquisition – date Consolidation Worksheet for Jake and its Variable Interest entity 3. Prepare a consolidation balance sheet after the acquisition Project: Consolidated Balance Sheet of and Acquisition-date consolidation worksheet for a parent and a variable interest entity' On January 1, 2021, Jake Corp. exchanged $850,000 for 40% of the out standing voting stock of Johnson Corp. Especially attractive to Jake Corp was a research project underway Johnson Corp that would enhance both quality and quantity of Chip production. Although not recorded in Johnson Corp's financial records, the fair value of the research project was considered to be $1,810,000. In contractual Agreements with the sole owner of the remaining 60% of the Johnson Corp., Jake Corp. was granted: 1. Various decision-making rights over Johnson Corp.'s operating decisions 2. Special service purchase provisions at below-market rates. As a result of these contractual; agreements, Jake Corp established itself as the primary beneficiary of Johnson Corp. Immediately after the purchase, Jake Corp. and Johnson Corp presented the following balance sheets: Jake Corp. 46,000 850,000 966,000 1,051,000 901,000 Johnson Corp. $4 26,000 Cash Investment in Johnson Corp Capitalized Chip production software Computer equipment Communication Equipment 141,000 41,000 321,000 176,000 705,000 Patent Total Assets $ 3,814,000 Long-term Debt Common Stock-Jake $ (926,000) (2,510,000) (601,000) Common Stock-Johnson Retained Earnings Total liabilities and equity (378,000) $ (3,814,000) (26,000) (78,000 (705,000) (Note: Parentheses indicate Credit balance) Each of the above amounts represents a fair value at January 1, 2021. The fair value of the 60% percent of Johnson Corp shares not owned by Jake Corp was estimated at $1,275,000 Requirement: 1. Compute the Goodwill resulted from the purchase 2. Prepare an acquisition – date Consolidation Worksheet for Jake and its Variable Interest entity 3. Prepare a consolidation balance sheet after the acquisition

Answer rating: 100% (QA)

Answer parent consolidates its subsidiaries relationship of parent and subsidiary arises if one enti... View the full answer