variable interest entities, segment reporting
(1) On December 31, 2013, Nanotech Firm invests $20,000 in SoftPlus, a variable curiosity entity. In contractual agreements accomplished on that date, PanTech established itself as the first beneficiary of SoftPlus. Beforehand, PanTech had no fairness curiosity in SoftPlus. Instantly after PanTech’s funding, SoftPlus presents the next stability sheet: Money $ 20,000 Lengthy-term debt $120,000 Advertising software program 140,000 Non-controlling curiosity 60,000 Pc tools 40,000 PanTech fairness curiosity 20,000 Whole belongings $200,000 Whole liabilities and fairness 200,000 Every of the above quantities represents an assessed truthful worth at December 31, 2013, aside from the advertising and marketing software program. a.If the advertising and marketing software program was undervalued by $20,000, what quantities for SoftPlus would seem in PanTech’s December 31, 2013, consolidated monetary statements? b.If the advertising and marketing software program was overvalued by $20,000, what quantities for SoftPlus would seem in PanTech’s December 31, 2013, consolidated monetary statements? (2) On January 1, 2012, Travers Firm acquired 90 % of Yarrow Company’s excellent inventory for $720,000. The 10 % non-controlling curiosity had an assessed truthful worth of $80,000 on that date. Any acquisition-date extra truthful worth over guide worth was attributed to an unrecorded buyer checklist developed by Yarrow with a remaining lifetime of 15 years. On the identical date, Yarrow acquired an 80 % curiosity in Stookey Firm for $344,000. On the acquisition date, the 20 % non-controlling curiosity truthful worth was $86,000. Any extra truthful worth was attributed to a absolutely amortized copyright that had a remaining lifetime of 10 years. Though each investments are accounted for utilizing the preliminary worth methodology, neither Yarrow nor Stookey have distributed dividends for the reason that acquisition date. Travers has a coverage to pay money dividends every year equal to 40 % of working earnings. Reported earnings totals for 2012 comply with: Travers Firm . . . . . . . . . . . . . . . $300,000 Yarrow Firm. . . . . . . . . . . . . . . 160,000 Stookey Firm . . . . . . . . . . . . . . 120,000 Following are the 2013 monetary statements for these three corporations. Stookey has transferred quite a few quantities of stock to Yarrow for the reason that takeover amounting to $80,000 (2012) and $100,000 (2013). These transactions embody the identical markup relevant to Stookey’s outdoors gross sales. In every year, Yarrow carried 20 % of this stock into the succeeding 12 months earlier than disposing of it. An efficient tax fee of 45 % is relevant to all corporations. Travers Yarrow Stookey Firm Firm Firm Gross sales. . . . . . . . . . . . . . . . . . . . . . . . . . $ (900,000) $ (600,000) (500,000) Price of products offered . . . . . . . . . . . . . . . 480,000 320,000 260,000 Working bills . . . . . . . . . . . . . . 100,000 80,000 40,000 Internet earnings . . . . . . . . . . . . . . . . . . . $ (320,000) $ (200,000) $(100,000) Retained earnings, 1/1/13 . . . . . . . . . .$ (700,000) $ (600,000) $(300,000) Internet earnings (above). . . . . . . . . . . . . . . (320,000) (200,000) (100,000) Dividends paid . . . . . . . . . . . . . . . . . . 128,000 –0– –0– Retained earnings, 12/31/13 . . . . . . $ (892,000) $ (800,000) $(400,000) Present belongings . . . . . . . . . . . . . . . . . . $ 444,000 $ 380,000 $ 280,000 Funding in Yarrow Firm . . . . . 720,000 –0– –0– Funding in Stookey Firm . . . . . –0– 344,000 -0– Land, buildings, and tools (web). 949,000 836,000 520,000 Whole belongings . . . . . . . . . . . . . . . . . . . $ 2,113,000 $ 1,560,000 $ 800,000 Liabilities. . . . . . . . . . . . . . . . . . . . . $ (721,000) $ (460,000) $(200,000) Widespread inventory. . . . . . . . . . . . . . . . . . (500,000) (300,000) 200,000) Retained earnings, 12/31/13. . . . . . . . (892,000) (800,000) (400,000) Whole liabilities and equities . . . . . . . $(2,113,000) $(1,560,000) $(800,000) a. Put together the enterprise combination’s 2013 consolidation worksheet; ignore earnings tax results. b.Decide the quantity of earnings tax for Travers and Yarrow on a consolidated tax return for 2013. c.Decide the quantity of Stookey’s earnings tax on a separate tax return for 2013. d.Primarily based on the solutions to necessities (b) and (c), what journal entry does this mixture make to file 2013 earnings tax? (three) Following is monetary data describing the six working segments that make up Fairfield, Inc. (in hundreds): Segments Pink Blue Inexperienced Pink Black White Gross sales to outdoors events . . . . $1,811 $812 $514 $309 $121 $ 99 Intersegment revenues . . . . . . 16 91 109 –0– 16 302 Wage expense . . . . . . . . . . . . 614 379 402 312 317 62 Hire expense . . . . . . . . . . . . . 139 166 81 92 42 31 Curiosity expense . . . . . . . . . . . 65 59 82 49 14 5 Revenue tax expense (financial savings) 141 87 61 (86) (64) –0– Take into account the next questions independently. Not one of the six segments has a primarily monetary nature. a. What minimal income quantity should anyone phase generate to be of great dimension to require disaggregated disclosure? b. If solely Pink, Blue, and Inexperienced necessitate separate disclosure, is Fairfield disclosing disaggregated knowledge for sufficient segments? c. What quantity of revenues should a single consumer generate to necessitate disclosing the existence of a serious buyer? d. If every of those six segments has a revenue or loss (in hundreds) as follows, which warrants separate disclosure? Pink. . . . . . . . . . $1,074 Pink . . . . . . . . $ (94) Blue . . . . . . . . . . . 449 Black . . . . . . . . . (222) Inexperienced . . . . . . . . . . 140 White. . . . . . . . . 308