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What amounts for Valery would appear in financial statements

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Question - On December 31, 2020, Petra Company invests $37,000 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 $37,000

Long-term debt $103,000

Marketing software 157,000

Noncontrolling interest 111,000

Computer equipment 57,000

Petra equity interest 37,000

Total assets $251,000

Total liabilities and equity $251,000

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 $148,000.

1. If the carrying amount of the marketing software was undervalued by $42,000, what amounts for Valery would appear in Petra's December 31, 2020, consolidated financial statements?

2. If the carrying amount of the marketing software was overvalued by $42,000, what amounts for Valery would appear in Petra's December 31, 2020, consolidated financial statements?

Reference no: EM132609988

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