Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arcadia paid $326.750 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.
Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arcadia paid $326.750 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Manji
Transcribed Image Text:Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arcadia paid
$326,750 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
Cash
Receivables
Inventory
Patents
Royalty agreements
Equipment (net)
Goodwill
Accounts payable
Long-term liabilities
Fair Values Carrying Amounts
1/1/23
12/31/24
$ 51,500
$ 99,500
196,000
246,500
215,000
261,500
731,000
840,500
617,250
590,000
322,500
241,000
?
436,000
Required A
(176,000)
(614,500)
Note: Parentheses indicate a credit balance.
Required:
a. Prepare Arcadia's journal entry to record the assets acquired and the liabilities assumed in the Bruno merger on January 1, 2023.
b. 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 $1,735,000. What amount of goodwill impairment, if any, should Arcadia recognize on its 2024
income statement?
Required B
(256,000)
(518,000)
Complete this question by entering your answers in the tabs below.
Answer is complete but not entirely correct.
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 $1,735,000. What amount of goodwill impairment, if any, should Arcadia
recognize on its 2024 income statement?
Goodwill impairment loss
S 656,131 X
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