Cash Marketing software Computer equipment Total assets Long-term debt Noncontrolling interest PanTech equity interest Total liabilities and equity $120,000 60,000 140,000 40,000 $200,000 20,000 $200,000

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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On December 31, 2017, PanTech Company invests $20,000 in SoftPlus, a variable interest entity. In contractual agreements completed on that date, PanTech established itself as the primary beneficiary of SoftPlus. Previously, PanTech had no equity interest in SoftPlus. Immediately after PanTech’s investment, SoftPlus presents the following balance sheet:
Each of the above amounts represents an assessed fair value at December 31, 2017, except for the marketing software. Accordingly the December 31 fair value of SoftPlus is assessed at $80,000.
a. If the marketing software was undervalued by $20,000, what amounts for SoftPlus would appear in PanTech’s December 31, 2017, consolidated financial statements?
b. If the marketing software was overvalued by $20,000, what amounts for SoftPlus would appear in PanTech’s December 31, 2017, consolidated financial statements?

Cash
Marketing software
Computer equipment
Total assets
Long-term debt
Noncontrolling interest
PanTech equity interest
Total liabilities and equity
$120,000
60,000
140,000
40,000
$200,000
20,000
$200,000
Transcribed Image Text:Cash Marketing software Computer equipment Total assets Long-term debt Noncontrolling interest PanTech equity interest Total liabilities and equity $120,000 60,000 140,000 40,000 $200,000 20,000 $200,000
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