Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arcadia paid $548,750 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Arcadia's stock had a fair value of $15 per share. The combination is a statutory merger with Bruno subsequently dissolved as a legal corporation. Bruno's assets and liabilities are assigned to a new reporting unit. The following shows fair values for the Bruno reporting unit for January 1, 2023, along with respective carrying amounts on December 31, 2024. Bruno Reporting Unit Fair Values 1/1/23 Carrying Amounts 12/31/24 Cash $ 102,500 $ 52,500 Receivables 198, 250 247,500 Inventory 235, 250 262, 500 Patents 821,000 898,500 Royalty agreements 621, 250 598, 000 Equipment (net) 393, 000 295,000 Goodwill ? 484,000 Accounts payable (126,500) (225, 000) Long - term liabilities (680,000) (596, 000) Note: Parentheses indicate a credit balance. Required: Prepare Arcadia's journal entry to record the assets acquired and the liabilities assumed in the Bruno merger on January 1, 2023. On December 31, 2024, Arcadia opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Bruno reporting unit is $1,745,000. What amount of goodwill impairment, if any, should Arcadia recognize on its 2024 income statement?
Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arcadia paid $548,750 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Arcadia's stock had a fair value of $15 per share. The combination is a statutory merger with Bruno subsequently dissolved as a legal corporation. Bruno's assets and liabilities are assigned to a new reporting unit. The following shows fair values for the Bruno reporting unit for January 1, 2023, along with respective carrying amounts on December 31, 2024. Bruno Reporting Unit Fair Values 1/1/23 Carrying Amounts 12/31/24 Cash $ 102,500 $ 52,500 Receivables 198, 250 247,500 Inventory 235, 250 262, 500 Patents 821,000 898,500 Royalty agreements 621, 250 598, 000 Equipment (net) 393, 000 295,000 Goodwill ? 484,000 Accounts payable (126,500) (225, 000) Long - term liabilities (680,000) (596, 000) Note: Parentheses indicate a credit balance. Required: Prepare Arcadia's journal entry to record the assets acquired and the liabilities assumed in the Bruno merger on January 1, 2023. On December 31, 2024, Arcadia opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Bruno reporting unit is $1,745,000. What amount of goodwill impairment, if any, should Arcadia recognize on its 2024 income statement?
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 33CE
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Transcribed Image Text:Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January
1, 2023. In exchange, Arcadia paid $548,750 in cash and issued 100,000 shares of its own $1
par value common stock. On this date, Arcadia's stock had a fair value of $15 per share. The
combination is a statutory merger with Bruno subsequently dissolved as a legal corporation.
Bruno's assets and liabilities are assigned to a new reporting unit. The following shows fair
values for the Bruno reporting unit for January 1, 2023, along with respective carrying amounts
on December 31, 2024. Bruno Reporting Unit Fair Values 1/1/23 Carrying Amounts 12/31/24
Cash $ 102,500 $ 52,500 Receivables 198, 250 247,500 Inventory 235, 250 262, 500 Patents
821,000 898,500 Royalty agreements 621, 250 598, 000 Equipment (net) 393, 000 295,000
Goodwill ? 484,000 Accounts payable (126,500) (225, 000) Long-term liabilities
(680,000) (596,000) Note: Parentheses indicate a credit balance. Required: Prepare Arcadia's
journal entry to record the assets acquired and the liabilities assumed in the Bruno merger on
January 1, 2023. On December 31, 2024, Arcadia opts to forgo any goodwill impairment
qualitative assessment and estimates that the total fair value of the entire Bruno reporting unit is
$1,745,000. What amount of goodwill impairment, if any, should Arcadia recognize on its 2024
income statement?
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