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In contractual agreements with the sole owner of the remaining 60 percent of Net
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 $ 58,000 $ 38,000 Investment in Net Connect 970,000 Capitalized software 978,000 153,000 Computer equipment 1,063,000 53,000 Communications equipment 913,000 333,000 Patent 188,000 Total assets $ 3,982,000 $ 765,000 Long-term debt $ (938,000 ) $ (613,000 ) Common stock-Access IT (2,630,000 ) Common stock-Net Connect (38,000 ) Retained earnings (414,000 ) (114,000 ) Total liabilities and equity $ (3,982,000 ) $ (765,000 ) Each of the above amounts represents a fair value at January 1, 2018. The fair value of the 60 percent of Net Connect shares not owned by Access IT was $1,455,000. Prepare an acquisition-date consolidated worksheet for Access IT and its variable interest entity.
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The products demand would be fixed because something that is classified as fixed is being changed so the change of value of the object would be fixed if the price dropped or increased hope that helps :)