Cherry_Case_05-3_Powerpoint_Final[1]

Cherry_Case_05-3_Powerpoint_Final[1] - Cherry Case 05-3...

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Click to edit Master subtitle style 12/2/10 Cherry Case 05-3
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12/2/10 Background Banana Inc. Berry Inc. Cherry LLC (Joint Venture) Contributes intellectual property with a fair value of $60 million and $20 million cash. ($80 Million Total) Receives 80% of common stock. 50% vote. Contributes $20 million cash. Receives 20% of common stock & right to supply all hardware & software used in the manufacturing process. 50% vote.
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12/2/10 Accounting Issues? Determine if Banana, Berry, or both, are required to apply the provisions of the variable interest entity (VIE) model in ASC 810-10 (Interpretation 46(R), as amended by Statement 167) to Cherry. Determine if Cherry is a VIE.
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12/2/10 Relevant Authoritative Literature ASC 810-10-15-14 The equity investors as a group also are considered to lack the characteristic in (b)(1) if both of the following conditions are present: “The voting rights of some investors are not proportional to their obligations to absorb the expected losses of the legal entity, their rights to receive the expected residual returns of the legal entity, or
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