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Calculate the amount of goodwill recognized, if any, on July 31, 2020, Goodwill

Calculate the amount of goodwill recognized, if any, on July 31, 2020, Goodwill

FINANCIAL ACCOUNTING
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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On July 31, 2020, Swifty Company paid $3,540,000 to acquire all of the common shares of Blue Spruce Incorporated, which became a division of Swifty. Blue Spruce reported the following statement of financial position at the time of the acquisition Blue Spruce Inc. Statement of Financial Position As at July 31, 2020 Current assets $944,000 Current liabilities $708.000 Non-current assets 3.186.000 Long-term liabilities 590.000 Shareholders'equity 2832.000 Total liabilities and Total assets $4.130.000 shareholders equity $4.130.000 Itwas determined at the date of the purchase that the fair value of the identifiable net assets of Blue Spruce was $3.245,000. Over the next six months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foresecable future. At December 31, 2020, Blue Spruce reports the following statement of financial position information: Current assets 531.000 Non-current assets (including goodwill recognized in purchase) 2,832.000 Current liabilities (826.000 ) Long-term liabilities (590,000 ) Net assets $1.947,000 It is determined that the fair value of the Blue Spruce Division as at December 31, 2020, is $2,183.000 The recorded amount for Blue Spruce's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value $177,000 above the carrying value. Assume that Swifty follows ASPE for financial reporting purposes. Calculate the amount of goodwill recognized, if any, on July 31, 2020. Goodwill $. Determine the loss on impairment. if any, to be recorded on December 31.2020.(f an answer s zero, please enter 0. Do not leave any fields blank.) Impairment loss Assume that fair value of the Blue Spruce Division is $1.888,000 instead of $2.183,000 Determine the loss on impairment, if any to be recorded on December 31.2020. Impairment loss Prepare the journal entry to record the loss on impairment, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Account Titles and Explanation Debit Credit
Transcribed Image Text:On July 31, 2020, Swifty Company paid $3,540,000 to acquire all of the common shares of Blue Spruce Incorporated, which became a division of Swifty. Blue Spruce reported the following statement of financial position at the time of the acquisition Blue Spruce Inc. Statement of Financial Position As at July 31, 2020 Current assets $944,000 Current liabilities $708.000 Non-current assets 3.186.000 Long-term liabilities 590.000 Shareholders'equity 2832.000 Total liabilities and Total assets $4.130.000 shareholders equity $4.130.000 Itwas determined at the date of the purchase that the fair value of the identifiable net assets of Blue Spruce was $3.245,000. Over the next six months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foresecable future. At December 31, 2020, Blue Spruce reports the following statement of financial position information: Current assets 531.000 Non-current assets (including goodwill recognized in purchase) 2,832.000 Current liabilities (826.000 ) Long-term liabilities (590,000 ) Net assets $1.947,000 It is determined that the fair value of the Blue Spruce Division as at December 31, 2020, is $2,183.000 The recorded amount for Blue Spruce's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value $177,000 above the carrying value. Assume that Swifty follows ASPE for financial reporting purposes. Calculate the amount of goodwill recognized, if any, on July 31, 2020. Goodwill $. Determine the loss on impairment. if any, to be recorded on December 31.2020.(f an answer s zero, please enter 0. Do not leave any fields blank.) Impairment loss Assume that fair value of the Blue Spruce Division is $1.888,000 instead of $2.183,000 Determine the loss on impairment, if any to be recorded on December 31.2020. Impairment loss Prepare the journal entry to record the loss on impairment, if any. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts) Account Titles and Explanation Debit Credit
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