On June 31, 2019, Majestic Co. acquired all of the common stock of Golden Compuny, which became a division of Majestic Co. Golden reported the following statenment of financial position at thetime of the acquisition:Golden CompanyStatement of Financial PositionAssetsEquity and LiabilitiesShare capital-ordinaryRetained eamingsAccounts payable3950.000Plant assets (net)InventoryReceivablesCashTotal assets$41,050,000375,000900,000650.000475.000250.000$2.325,000 Total equity and liabilities$2.125.000An appraisal indicated that the fair value of the inventory was $355,000 and the fair value of the plant assets was $1,350,000. The agreed purchave price was $2,500,000, and this amount was paid incash to the previous owners of Golden Company 375,000650,000230.000Retained ningAccounts payahle900.000eventoryReceivablesCashTmal aets475.000$2.32 000Thestequity and liahilities 3212An sppraisal indicated that the fair valar of the inventury waw S35,000 and the fair value of the plant asseta wan S1350.000. The agreod purchase price wa $2,500,000, and this amount was paid incanh to the previous owner of Golden Company.Required:Prepare the entry to rocord the purchase of Golden Companyb. Assume that the carrying amount of Golden Company division's net assets, including goodwill is $2,700,000. The recoverable amount of the division is estimated to be 52,600,000. Prepare the journal entry to record the impairment loss (If any) on December 31, 2019.

Name: On June 31, 2019, Majestic Co. acquired all of the common stock of Go
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Description: On June 31, 2019, Majestic Co. acquired all of the common stock of Golden Compuny, which became a division of Majestic Co. Golden reported the following statenment of financial position at thetime of the acquisition:Golden CompanyStatement of Financ

Fair value of net identifiable assets = $1,350,000 + $355,000 + $650,000 + $250,000 - $475,000 =…

Business

Accounting

375,000 610,00 250.000 Retained ernngs Arcounts payahle 900.000 Deventory Receivahles 41.000 (Tatal as 0002 n nbe tS An sppraisal indicatel that the fair valr of the inventory wa S355,000 and the fair valur of the plant sets was $1,350,000. The agreed purchase price wan $2.100,000, and this amount was paid in canh to the previous ower of Colden Conpany Required: Prepare the entry to record the purchase of Golden Company D. Assume that te carrying amount of Golden Company division's net assets, including goodwit is $2,700,000. The recoverable amount of the division is estimated to be 5 2,600,000. Prepare the journal entry to record the impairment loss (If any) on December 31, 2019.

375,000 610,00 250.000 Retained ernngs Arcounts payahle 900.000 Deventory Receivahles 41.000 (Tatal as 0002 n nbe tS An sppraisal indicatel that the fair valr of the inventory wa S355,000 and the fair valur of the plant sets was $1,350,000. The agreed purchase price wan $2.100,000, and this amount was paid in canh to the previous ower of Colden Conpany Required: Prepare the entry to record the purchase of Golden Company D. Assume that te carrying amount of Golden Company division's net assets, including goodwit is $2,700,000. The recoverable amount of the division is estimated to be 5 2,600,000. Prepare the journal entry to record the impairment loss (If any) on December 31, 2019.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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