(Solution Download) The Primary Company and the VIE Company had the balance

The Primary Company and the VIE Company had the balance sheet shown in Problem SA2-1 above on the date control was achieved. The Primary Company guaranteed the 5% bond payable issued by the VIE Company. The Primary Company also loaned the VIE Company $300,000 on a subordinated note at 10% annual interest.
The fair value of the VIE Company's assets (without deduction for debt) is $870,000. Equipment, with a 5 year life is $50,000 greater than book value.
The VIE company will pay 10% annual interest to the Primary Company on the intercompany loan. The VIE will also pay a fee of 5% on its sales revenue to the Primary Company.
The Primary Company and the VIE Company had the following trail balances on December 31, 2016:

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1. Prepare a determination and distribution of excess schedule for the schedule. (If problem SA12-1 was completed, the same schedule applies).
2. Prepare a consolidate worksheet for the Primary and VIE Companies as of December 31, 2016. Include the income distribution schedules?

 

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