Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arcadia paid $324,250 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 1/1/23 $ 90,500 Carrying Amounts 12/31/24 $ 48,500 210,250 243,500 219,500 258,500 390,500 501,500 681,500 658,000 386,000 289,000 ? 556,000 (178,000) (532,000) (246,000) (448,000) 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 $1,705,000. 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 $324,250 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 1/1/23 $ 90,500 Carrying Amounts 12/31/24 $ 48,500 210,250 243,500 219,500 258,500 390,500 501,500 681,500 658,000 386,000 289,000 ? 556,000 (178,000) (532,000) (246,000) (448,000) 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 $1,705,000. What amount of goodwill impairment, if any, should Arcadia recognize on its 2024 income statement?

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter7: Corporations: Reorganizations

Section: Chapter Questions

Problem 43P

See similar textbooks

Similar questions

Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arcadia paid $241,000 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 $ 74,000 $ 43,000 Receivables 203,250 238,000 Inventory 205,500 253,000 Patents 583,500 670,000 Royalty agreements 660,750 630,000 Equipment (net) 374,500 308,000 Goodwill ? 416,000 Accounts payable (136,000) (198,000) Long-term liabilities (640,500) (558,000) Note: Parentheses indicate a credit balance. Required: a.…
Manji
Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $548,750 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso’s stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire’s assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. BelAire Reporting Unit Fair Values1/1/20 Carrying Amounts12/31/21 Cash $ 102,500 $ 52,500 Receivables 198,250 247,500 Inventory 235,250 262,500 Patents 821,000 898,500 Customer relationships 621,250 598,000 Equipment (net) 393,000 295,000 Goodwill ? 484,000 Accounts payable (126,500 ) (225,000 ) Long-term liabilities (680,000 )…
Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $263,500 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso's stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire's assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. BelAire Reporting Unit Cash Receivables Inventory Patents Customer relationships Equipment (net) Goodwill Accounts payable Long-term liabilities Note: Parentheses indicate credit balance. Fair Values 1/1/20 68,000 182,500 219,000 $ 371,500 603,500 404,500 ? (123,500) (524,000) Carrying Amounts $ 12/31/21 41,000 236,000 251,000 467,000 574,000 339,000 562,000 (188,000) (452,000) a. Prepare Alfonso's journal entry to…
Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arca $461,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Arcadia's stock had a fair per share. The combination is a statutory merger with Bruno subsequently dissolved as a legal corporation. Bruno's assets 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 or 31, 2024. Bruno Reporting Unit Cash Receivables Inventory Patents Royalty agreements. Equipment (net) Goodwill Accounts payable Long-term liabilities Note: Parentheses indicate a credit balance. Fair Values 1/1/23 $ 89,000 189,750 218,750 776,500 586,000 355,000 ? (114,500) (591,500) Required: a. Calculate the goodwill recognized in the combination. Carrying Amounts $ 48,000 243,000 12/31/24 258,000 860,000 546,000 269,000 452,000 (184,000) (518,000)
Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $461,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonso's stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAire's assets and liabilities are assigned to a new reporting unit. The following shows fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. TT Fair Values 1/1/20 $ Carrying Amounts BelAire Reporting Unit Cash 12/31/21 $ 89,000 189,750 218,750 776, 500 586,000 355,000 48,000 243,000 258,000 860,000 546,000 269,000 452,000 (184,000) (518,000) Receivables Inventory Patents Customer relationships Equipment (net) Goodwill Accounts payable Long-term liabilities (114,500) (591,500) Note: Parentheses indicate a credit balance. a. Prepare Alfonso's journal entry…
Francisco Inc. acquired 100 percent of the voting shares of Beltran Company on January 1, 2017. In exchange, Francisco paid $450,000 in cash and issued 104,000 shares of its own $1 par value common stock. On this date, Francisco’s stock had a fair value of $12 per share. The combination is a statutory merger with Beltran subsequently dissolved as a legal corporation. Beltran’s assets and liabilities are assigned to a new reporting unit.The following reports the fair values for the Beltran reporting unit for January 1, 2017, and December 31, 2018, along with their respective book values on December 31, 2018.a. Prepare Francisco’s journal entry to record the assets acquired and the liabilities assumed in the Beltran merger on January 1, 2017.b. On December 31, 2018, Francisco opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Beltran reporting unit is $1,425,000. What amount of goodwill impairment, if any, should Francisco…
Please help me to solve this problem
Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, in exchange for $6,059,500 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias’s stockholders’ equity was $2,045,000 including retained earnings of $1,545,000. At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: Consideration transferred $ 6,059,500 Mathias stockholders' equity 2,045,000 Excess fair over book value $ 4,014,500 to unpatented technology (8-year remaining life) $ 872,000 to patents (10-year remaining life) 2,590,000 to increase long-term debt (undervalued, 5-year remaining life) (145,000) 3,317,000 Goodwill $ 697,500 Postacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business…
Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, in exchange for $6,203,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias’s stockholders’ equity was $2,080,000 including retained earnings of $1,580,000. At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: Consideration transferred $ 6,203,000Mathias stockholders' equity 2,080,000Excess fair over book value $ 4,123,000to unpatented technology (8-year remaining life) $ 928,000 to patents (10-year remaining life) 2,660,000 to increase long-term debt (undervalued, 5-year remaining life) (180,000) 3,408,000Goodwill $ 715,000Postacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the…
Manji
On September 18, 2020, OPQ Co. acquired all of TUV Inc.’s P400,000 identifiable assets and P100,000 liabilities. Book values of TUV’s assets and liabilities equal their fair values except for an overvalued Building. As a consideration, OPQ Co. issued its own shares of stock with a market value of P320,000. The merger resulted into P140,000 goodwill. Assuming OPQ Co. had P1,000,000 total assets prior to the combination, compute the total assets immediately after the merger.