On January 1, 2024, Platform Company exchanged $960,000 for 30 percent of the outstanding voting stock of Vector Company. Especially attractive to Platform was a research project underway at Vector that would enhance both the speed and quantity of client- accessible data. Although not recorded in Vector's financial records, the fair value of the research project was considered to be $$2,580,000. Also Vector possessed unpatented technology with a fair value of $472,000. In contractual agreements with the sole owner of the remaining 70 percent of Vector, Platform was granted (1) various decision-making rights over Vector's operating decisions and (2) special service purchase provisions at below-market rates. As a result of these contractual agreements, Platform established itself as the primary beneficiary of Vector. Immediately after the purchase, Platform and Vector presented the following balance sheets: (Note: Parentheses Indicate credit balances.) Accounts Cash Investment in Vector Capitalized software Computer equipment Communications equipment Patent Total assets Long-term debt Common stock-Platform Common stock-Vector Retained earnings Total liabilities and equity Platform $ 57,000 960,000 977,000 1,062,000 912,000 $ 3,968,000 $ (937,000) (2,628,000) (411,000) $ (3,968,000) Vector $ 37,000 152,000 52,000 332,000 187,000 $ 760,000 $ (612,000) (37,000) (111,000) $ (760,000) Each of the above amounts represents a fair value at January 1, 2024. The fair value of the 70 percent of Vector shares not owned by Platform was estimated at $2,240,000. Required: Prepare an acquisition-date consolidation worksheet for Platform and its variable interest entity. Note: 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, 2024, Platform Company exchanged $960,000 for 30 percent of the outstanding voting stock of Vector Company. Especially attractive to Platform was a research project underway at Vector that would enhance both the speed and quantity of client- accessible data. Although not recorded in Vector's financial records, the fair value of the research project was considered to be $$2,580,000. Also Vector possessed unpatented technology with a fair value of $472,000. In contractual agreements with the sole owner of the remaining 70 percent of Vector, Platform was granted (1) various decision-making rights over Vector's operating decisions and (2) special service purchase provisions at below-market rates. As a result of these contractual agreements, Platform established itself as the primary beneficiary of Vector. Immediately after the purchase, Platform and Vector presented the following balance sheets: (Note: Parentheses Indicate credit balances.) Accounts Cash Investment in Vector Capitalized software Computer equipment Communications equipment Patent Total assets Long-term debt Common stock-Platform Common stock-Vector Retained earnings Total liabilities and equity Platform $ 57,000 960,000 977,000 1,062,000 912,000 $ 3,968,000 $ (937,000) (2,628,000) (411,000) $ (3,968,000) Vector $ 37,000 152,000 52,000 332,000 187,000 $ 760,000 $ (612,000) (37,000) (111,000) $ (760,000) Each of the above amounts represents a fair value at January 1, 2024. The fair value of the 70 percent of Vector shares not owned by Platform was estimated at $2,240,000. Required: Prepare an acquisition-date consolidation worksheet for Platform and its variable interest entity. Note: 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Denger
![On January 1, 2024, Platform Company exchanged $960,000 for 30 percent of the outstanding voting stock of Vector Company.
Especially attractive to Platform was a research project underway at Vector that would enhance both the speed and quantity of client-
accessible data. Although not recorded in Vector's financial records, the fair value of the research project was considered to be
$$2,580,000. Also Vector possessed unpatented technology with a fair value of $472,000.
In contractual agreements with the sole owner of the remaining 70 percent of Vector, Platform was granted (1) various decision-making
rights over Vector's operating decisions and (2) special service purchase provisions at below-market rates. As a result of these
contractual agreements, Platform established itself as the primary beneficiary of Vector. Immediately after the purchase, Platform and
Vector presented the following balance sheets:
(Note: Parentheses Indicate credit balances.)
Accounts
Cash
Investment in Vector
zed software
Computer equipment
Communications equipment
Patent
Total assets
Long-term debt
Common stock-Platform
Common stock-Vector
Retained earnings
Total liabilities and equity
Cash
Accounts
Investment in Vector
Capitalized software
Computer equipment
Communications equipment
Research and development asset
Patent
Unpatented Technology
Total assets
Long-term debt
$
Platform
Each of the above amounts represents a fair value at January 1, 2024. The fair value of the 70 percent of Vector shares not owned by
Platform was estimated at $2,240,000.
Platform
$ 57,000
960,000
977,000
1,062,000
912,000
$ 3,968,000
$ (937,000)
(2,620,000)
Required:
Prepare an acquisition-date consolidation worksheet for Platform and its variable interest entity.
Note: 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.
(411,000)
$ (3,968,000)
960,000
977,000
1,062,000
912,000
57,000 $
PLATFORM COMPANY AND VECTOR
Consolidation Worksheet
At January 1, 2024
Vector
37,000
Vector
152,000
52,000
332,000
$ 37,000
187,000
152,000
52,000
332,000
187,000
$ 760,000
$ (612,000)
$ 3,968,000 S
760,000
$ (937,000) $ (612,000)
(37,000)
(111,000)
$ (760,000)
Consolidation Entries
Credit
Debit
Noncontrolling Consolidated
Balances
Interest
$
0](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F6e6cceeb-9ae9-437d-b0c8-71dc538b5f6a%2F7b9f10a1-23ba-4f8c-a993-32397e94bf81%2F7kvmjrp_processed.jpeg&w=3840&q=75)
Transcribed Image Text:On January 1, 2024, Platform Company exchanged $960,000 for 30 percent of the outstanding voting stock of Vector Company.
Especially attractive to Platform was a research project underway at Vector that would enhance both the speed and quantity of client-
accessible data. Although not recorded in Vector's financial records, the fair value of the research project was considered to be
$$2,580,000. Also Vector possessed unpatented technology with a fair value of $472,000.
In contractual agreements with the sole owner of the remaining 70 percent of Vector, Platform was granted (1) various decision-making
rights over Vector's operating decisions and (2) special service purchase provisions at below-market rates. As a result of these
contractual agreements, Platform established itself as the primary beneficiary of Vector. Immediately after the purchase, Platform and
Vector presented the following balance sheets:
(Note: Parentheses Indicate credit balances.)
Accounts
Cash
Investment in Vector
zed software
Computer equipment
Communications equipment
Patent
Total assets
Long-term debt
Common stock-Platform
Common stock-Vector
Retained earnings
Total liabilities and equity
Cash
Accounts
Investment in Vector
Capitalized software
Computer equipment
Communications equipment
Research and development asset
Patent
Unpatented Technology
Total assets
Long-term debt
$
Platform
Each of the above amounts represents a fair value at January 1, 2024. The fair value of the 70 percent of Vector shares not owned by
Platform was estimated at $2,240,000.
Platform
$ 57,000
960,000
977,000
1,062,000
912,000
$ 3,968,000
$ (937,000)
(2,620,000)
Required:
Prepare an acquisition-date consolidation worksheet for Platform and its variable interest entity.
Note: 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.
(411,000)
$ (3,968,000)
960,000
977,000
1,062,000
912,000
57,000 $
PLATFORM COMPANY AND VECTOR
Consolidation Worksheet
At January 1, 2024
Vector
37,000
Vector
152,000
52,000
332,000
$ 37,000
187,000
152,000
52,000
332,000
187,000
$ 760,000
$ (612,000)
$ 3,968,000 S
760,000
$ (937,000) $ (612,000)
(37,000)
(111,000)
$ (760,000)
Consolidation Entries
Credit
Debit
Noncontrolling Consolidated
Balances
Interest
$
0
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