Business, 10.03.2020 01:36 deemy0292

Posit Company has a financial relationship with Sparkle Inc., a separate legal entity, but does not own any of Sparkle's voting stock. On January 1, 2020, Posit determines that Sparkle is a variable interest entity and that Posit is Sparkle's prime beneficiary. Sparkle's shareholders' equity on January 1, 2020 is as follows:

Capital stock $3,000

Retained deficit(500)

Total $2,500

Sparkle's net assets are reported at values approximating fair value, but it has previously unreported identifiable intangible assets valued at $7,000. The fair value of Sparkle at January 1, 2020 is $16,000.

Assume Posit and Sparkle were already under common control. On a January 1, 2020 consolidated balance sheet, the noncontrolling interest in Sparkle is reported at:

A. $0
B. $16,000
C. $ 2,500
D. $ 8,000

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Posit Company has a financial relationship with Sparkle Inc., a separate legal entity, but does not...

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