on december 31 year 4 russell inc invested 20 000 in charger corp prior to this russ 3387291

On December 31, Year 4, Russell Inc. invested $20,000 in Charger Corp. Prior to this Russell had no interest in Charger. Upon review of the documentation related to Russell’s investment, the controller of Russell determined that Charger is a variable interest entity and Russell is its primary beneficiary. Immediately after Russell’s investment, Charger Corp. prepared the following balance sheet: Each of the above amounts represents the fair value at December 31, Year 4, except for marketing software. Charger Corp. is carrying on a business. Required: (a) If the marketing software was undervalued by $20,000, what reported amounts for Charger’s financial statement items would appear in Russell’s December 31, Year 4, consolidated balance sheet? (b) If the marketing software was overvalued by $20,000, what reported amounts for Charger’s financial statement items would appear in Russell’s December 31, Year 4, consolidated balance sheet? (c) Calculate goodwill and non-controlling interest for part (b) under parent company extension theory.

 

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