Business, 19.03.2020 06:14 rocksquad9125

On January 1, 2018, Access IT Company exchanged $1,000,000 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 $1,960,000.
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:
Access IT Net Connect
Cash $61,000 $41,000
Investment in Net Connect. 100,000
Capitalized software 981,000 156,000
Computer equipment 1,066,000 56,000
Communications equipment 916,000 336,000
Patent 191,000
Total assets $4,024,000 $780,000
Long-term debt $ (941,000) $ (616,000)
Common stock-Access IT (2,660,000)
Common stock-Net Connect (41,000)
Retained earnings (423,000) (123,000)
Total liabilities and equity $(4,024,000) $(780,000)

Each of the above amounts represents a fair value at January 1, 2014. The fair value of the 60 percent of Net Connect shares not owned by Access IT was $1,500,000.
Required:
Prepare an acquisition-date consolidated worksheet for Access IT and its variable interest entity.

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On January 1, 2018, Access IT Company exchanged $1,000,000 for 40 percent of the outstanding voting...

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