On December 31, 2020, Petra Company invests $40,000 in Valery, a variable interest entity. In contractual agreements completed onthat date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediatelyafter Petra's investment, Valery presents the following balance sheet:CashMarketing softwareComputer equipmentTotal assets40,000160,00060,000$ 260,000$Required ALong-term debtNoncontrolling interestPetra equity interestTotal liabilities and equityEach of the amounts represents an assessed fair value at December 31, 2020, except for the marketing software.The December 31 business fair value of Valery is assessed at $160,000.Required Ba. If the carrying amount of the marketing software was undervalued by $45,000, what amounts for Valery would appear in Petra'sDecember 31, 2020, consolidated financial statements?Complete this question by entering your answers in the tabs below.b. If the carrying amount of the marketing software was overvalued by $45,000, what amounts for Valery would appear in Petra'sDecember 31, 2020, consolidated financial statements?100,000120,00040,000$ 260,000Amount$If the carrying amount of the marketing software was undervalued by $45,000, what amounts for Valery would appear inPetra's December 31, 2020, consolidated financial statements? (Input all amounts as positive values.)Account< Required ARequired B >

Consolidated Financial Statement -A consolidated financial statement is a single, well-organized…

On December 31, 2020, Petra Company invests $40,000 in Valery, a variable interest entity. In contractual agreements completed on that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately after Petra's investment, Valery presents the following balance sheet: Cash Marketing software Computer equipment Total assets $ 40,000 160,000 60,000 $ 260,000 Long-term debt Noncontrolling interest Petra equity interest Total liabilities and equity $ 100,000 120,000 40,000 $ 260,000 Each of the amounts represents an assessed fair value at December 31, 2020, except for the marketing software. The December 31 business fair value of Valery is assessed at $160,000. a. If the carrying amount of the marketing software was undervalued by $45,000, what amounts for Valery would appear in Petra's December 31, 2020, consolidated financial statements? b. If the carrying amount of the marketing software was overvalued by $45,000, what amounts for Valery would appear in Petra's December 31, 2020, consolidated financial statements?

On December 31, 2020, Petra Company invests $40,000 in Valery, a variable interest entity. In contractual agreements completed on that date, Petra established itself as the primary beneficiary of Valery. Previously, Petra had no equity interest in Valery. Immediately after Petra's investment, Valery presents the following balance sheet: Cash Marketing software Computer equipment Total assets $ 40,000 160,000 60,000 $ 260,000 Long-term debt Noncontrolling interest Petra equity interest Total liabilities and equity $ 100,000 120,000 40,000 $ 260,000 Each of the amounts represents an assessed fair value at December 31, 2020, except for the marketing software. The December 31 business fair value of Valery is assessed at $160,000. a. If the carrying amount of the marketing software was undervalued by $45,000, what amounts for Valery would appear in Petra's December 31, 2020, consolidated financial statements? b. If the carrying amount of the marketing software was overvalued by $45,000, what amounts for Valery would appear in Petra's December 31, 2020, consolidated financial statements?

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 18PC

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