Homework Help is Here – Start Your Trial Now!
Business
Accounting
On January 1, 2021, Access IT Company exchanged $880,000 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 $1,840,000. 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: (Note: Parentheses indicate credit balances.) Cash Investment in Net Connect Capitalized software Computer equipment Communications equipment Patent Total assets Long-term debt Common stock-Access IT Common stock-Net Connect Retained earnings Total liabilities and equity $ Access IT 49,000 880,000 969,000 1,054,000 904,000 $ 3,856,000 $ (929,000) (2,540,000) (387,000) $(3,856,000) Net Connect 29,000 $ 144,000 44,000 324,000 179,000 $ 720,000 $ (604,000) (29,000) (87,000) $ (720,000) Each of the above amounts represents a fair value at January 1, 2021. The fair value of the 60 percent of Net Connect shares not owned by Access IT was estimated at $1,320,000. Prepar acquisition-date consolidation worksheet for Access IT and its variable interest entity. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.)

On January 1, 2021, Access IT Company exchanged $880,000 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 $1,840,000. 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: (Note: Parentheses indicate credit balances.) Cash Investment in Net Connect Capitalized software Computer equipment Communications equipment Patent Total assets Long-term debt Common stock-Access IT Common stock-Net Connect Retained earnings Total liabilities and equity $ Access IT 49,000 880,000 969,000 1,054,000 904,000 $ 3,856,000 $ (929,000) (2,540,000) (387,000) $(3,856,000) Net Connect 29,000 $ 144,000 44,000 324,000 179,000 $ 720,000 $ (604,000) (29,000) (87,000) $ (720,000) Each of the above amounts represents a fair value at January 1, 2021. The fair value of the 60 percent of Net Connect shares not owned by Access IT was estimated at $1,320,000. Prepar acquisition-date consolidation worksheet for Access IT and its variable interest entity. (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
On January 1, 2021, Access IT Company exchanged $880,000 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 $1,840,000. In contractual agreements with the sole owner of the remaining 60 percent of Net Connect, Access IT was granted (1) various decision-making rights over Net Connect's operating decisions and (2) special service purchase provisions at below-market rates. As a result of these contractual agreements, Access IT established itself as the primary beneficiary of Net Connect. Immediately after the purchase, Access IT and Net Connect presented the following balance sheets: (Note: Parentheses indicate credit balances.) | | Access IT ($) | Net Connect ($) | |-------------------|---------------:|----------------:| | Cash | 49,000 | 29,000 | | Investment in Net Connect | 880,000 | | | Capitalized software | 969,000 | 144,000 | | Computer equipment | 1,054,000 | 44,000 | | Communications equipment | 904,000 | 324,000 | | Patent | | 179,000 | | **Total assets** | **3,856,000** | **720,000** | | Long-term debt | (929,000) | (604,000) | | Common stock–Access IT | (2,540,000) | | | Common stock–Net Connect | | (29,000) | | Retained earnings | (387,000) | (87,000) | | **Total liabilities and equity** | **(3,856,000)** | **(720,000)** | Each of the above amounts represents a fair value at January 1, 2021. The fair value of the 60 percent of Net Connect shares not owned by Access IT was estimated at $1,320,000. Prepare an acquisition-date consolidation worksheet for Access IT and its variable interest entity. *(For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly
Transcribed Image Text:On January 1, 2021, Access IT Company exchanged $880,000 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 $1,840,000. In contractual agreements with the sole owner of the remaining 60 percent of Net Connect, Access IT was granted (1) various decision-making rights over Net Connect's operating decisions and (2) special service purchase provisions at below-market rates. As a result of these contractual agreements, Access IT established itself as the primary beneficiary of Net Connect. Immediately after the purchase, Access IT and Net Connect presented the following balance sheets: (Note: Parentheses indicate credit balances.) | | Access IT ($) | Net Connect ($) | |-------------------|---------------:|----------------:| | Cash | 49,000 | 29,000 | | Investment in Net Connect | 880,000 | | | Capitalized software | 969,000 | 144,000 | | Computer equipment | 1,054,000 | 44,000 | | Communications equipment | 904,000 | 324,000 | | Patent | | 179,000 | | **Total assets** | **3,856,000** | **720,000** | | Long-term debt | (929,000) | (604,000) | | Common stock–Access IT | (2,540,000) | | | Common stock–Net Connect | | (29,000) | | Retained earnings | (387,000) | (87,000) | | **Total liabilities and equity** | **(3,856,000)** | **(720,000)** | Each of the above amounts represents a fair value at January 1, 2021. The fair value of the 60 percent of Net Connect shares not owned by Access IT was estimated at $1,320,000. Prepare an acquisition-date consolidation worksheet for Access IT and its variable interest entity. *(For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly
**Consolidation Worksheet for Access IT and Net Connect** Date: January 1, 2021 --- **Column Headings:** 1. **Access IT** 2. **Net Connect** 3. **Consolidation Entries** - Debit 4. **Consolidation Entries** - Credit 5. **Noncontrolling Interest (NCI)** 6. **Consolidated Balances** --- **Accounts and Balances:** - **Assets:** - Cash: - Access IT: $49,000 - Net Connect: $29,000 - Investment in Net Connect: - Access IT: $880,000 - Capitalized Software: - Access IT: $969,000 - Net Connect: $144,000 - Computer Equipment: - Access IT: $1,054,000 - Net Connect: $44,000 - Communications Equipment: - Access IT: $904,000 - Net Connect: $324,000 - Research and Development Asset: - Net Connect: (No amount listed) - Patent: - Net Connect: $179,000 - Goodwill: (No amounts listed for Access IT or Net Connect) - **Total Assets:** - Access IT: $3,856,000 - Net Connect: $720,000 - **Liabilities and Equity:** - Long-Term Debt: - Access IT: $(929,000) - Net Connect: $(604,000) - Common Stock: - Access IT: $(2,540,000) - Net Connect: $(29,000) - Retained Earnings: - Access IT: $(387,000) - Net Connect: $(87,000) - Noncontrolling Interest: - (No amounts listed) - **Total Liabilities and Equity:** - Access IT: $(3,856,000) - Net Connect: $(720,000) - **Consolidation Entries (Debit, Credit, NCI):** - (No amounts listed) - **Consolidated Balances:** - Total: $0 --- **Instructions:** Prepare an acquisition-date consolidation worksheet for Access IT and its variable interest entity. For accounts where multiple consolidation entries are required, combine all debit
Transcribed Image Text:**Consolidation Worksheet for Access IT and Net Connect** Date: January 1, 2021 --- **Column Headings:** 1. **Access IT** 2. **Net Connect** 3. **Consolidation Entries** - Debit 4. **Consolidation Entries** - Credit 5. **Noncontrolling Interest (NCI)** 6. **Consolidated Balances** --- **Accounts and Balances:** - **Assets:** - Cash: - Access IT: $49,000 - Net Connect: $29,000 - Investment in Net Connect: - Access IT: $880,000 - Capitalized Software: - Access IT: $969,000 - Net Connect: $144,000 - Computer Equipment: - Access IT: $1,054,000 - Net Connect: $44,000 - Communications Equipment: - Access IT: $904,000 - Net Connect: $324,000 - Research and Development Asset: - Net Connect: (No amount listed) - Patent: - Net Connect: $179,000 - Goodwill: (No amounts listed for Access IT or Net Connect) - **Total Assets:** - Access IT: $3,856,000 - Net Connect: $720,000 - **Liabilities and Equity:** - Long-Term Debt: - Access IT: $(929,000) - Net Connect: $(604,000) - Common Stock: - Access IT: $(2,540,000) - Net Connect: $(29,000) - Retained Earnings: - Access IT: $(387,000) - Net Connect: $(87,000) - Noncontrolling Interest: - (No amounts listed) - **Total Liabilities and Equity:** - Access IT: $(3,856,000) - Net Connect: $(720,000) - **Consolidation Entries (Debit, Credit, NCI):** - (No amounts listed) - **Consolidated Balances:** - Total: $0 --- **Instructions:** Prepare an acquisition-date consolidation worksheet for Access IT and its variable interest entity. For accounts where multiple consolidation entries are required, combine all debit
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps with 2 images

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Accounting for Intangible assets
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS