variable interest entities segment reporting 483897

(1) On December 31, 2013, Nanotech Company invests $20,000 in SoftPlus, a variable interest entity. In contractual agreements completed on that date, PanTech established itself as the primary beneficiary of SoftPlus. Previously, PanTech had no equity interest in SoftPlus. Immediately after PanTech’s investment, SoftPlus presents the following balance sheet: Cash $ 20,000 Long-term debt $120,000 Marketing software 140,000 Non-controlling interest 60,000 Computer equipment 40,000 PanTech equity interest 20,000 Total assets $200,000 Total liabilities and equity 200,000 Each of the above amounts represents an assessed fair value at December 31, 2013, except for the marketing software. a. If the marketing software was undervalued by $20,000, what amounts for SoftPlus would appear in PanTech’s December 31, 2013, consolidated financial statements? b. If the marketing software was overvalued by $20,000, what amounts for SoftPlus would appear in PanTech’s December 31, 2013, consolidated financial statements? (2) On January 1, 2012, Travers Company acquired 90 percent of Yarrow Company’s outstanding stock for $720,000. The 10 percent non-controlling interest had an assessed fair value of $80,000 on that date. Any acquisition-date excess fair value over book value was attributed to an unrecorded customer list developed by Yarrow with a remaining life of 15 years. On the same date, Yarrow acquired an 80 percent interest in Stookey Company for $344,000. At the acquisition date, the 20 percent non-controlling interest fair value was $86,000. Any excess fair value was attributed to a fully amortized copyright that had a remaining life of 10 years. Although both investments are accounted for using the initial value method, neither Yarrow nor Stookey have distributed dividends since the acquisition date. Travers has a policy to pay cash dividends each year equal to 40 percent of operating earnings. Reported income totals for 2012…