Goodwill Impairment Test-After Adoption of FASB ASU 2017-04 Assume the equity method Equity Investment account relating to a subsidiary has a reported balance of $10,040,000, including $960,000 of Goodwill. The fair value of the subsidiary is $9.000.000. The fair value of the subsidiary's individually identifiable net assets is $8,600,000. Th subsidiary has only one reporting unit, which is the same as the overall entity. For this fact set, determine whether Goodwill is impaired and, if so, the amount of impairment. Enter the impairment amount below. If goodwill in not impaired, enter zero. $ 400.000 x Prepare the required journal entry if you determine Goodwill is impaired. If goodwill is not impaired, select "No entry" as your answers under Description and leave the Debit and Credit answers blank (zero). Credit Description Equity income from subsidiary Equity investment Debit ✔ 560,000 * 0✔ 0✓ 560,000 x

Goodwill Impairment Test-After Adoption of FASB ASU 2017-04 Assume the equity method Equity Investment account relating to a subsidiary has a reported balance of $10,040,000, including $960,000 of Goodwill. The fair value of the subsidiary is $9.000.000. The fair value of the subsidiary's individually identifiable net assets is $8,600,000. Th subsidiary has only one reporting unit, which is the same as the overall entity. For this fact set, determine whether Goodwill is impaired and, if so, the amount of impairment. Enter the impairment amount below. If goodwill in not impaired, enter zero. $ 400.000 x Prepare the required journal entry if you determine Goodwill is impaired. If goodwill is not impaired, select "No entry" as your answers under Description and leave the Debit and Credit answers blank (zero). Credit Description Equity income from subsidiary Equity investment Debit ✔ 560,000 * 0✔ 0✓ 560,000 x

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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A parent company acquired an 80% interest in a subsidiary on July 1, 2015. The subsidiary closed its books on that date. The subsidiary reported net income of $60,000 for 2015, earned evenly during the year. The parent’s net income, exclusive of any income of the subsidiary, was $140,000. The fair value of the subsidiary exceeded book value by $100,000. The entire difference was attributed to a patent with a10-year life. a. What is consolidated net income for 2015? b. What is the noncontrolling share of net income for 2015?
Consolidated Worksheet Preparation You will be creating and entering formulas to complete four worksheets. The first objective is to demonstrate the effect of different methods of accounting for the investments (equity, initial value, and partial equity) on the parent company’s trial balance and on the consolidated worksheet subsequent to acquisition. The second objective is to show the effect on consolidated balances and key financial ratios of recognizing a goodwill impairment loss. Project Scenario Pecos Company acquired 100 percent of Suaro’s outstanding stock for $1,450,000 cash on January 1, 2017, when Suaro had the following balance sheet:(THIS IS IN THE PICTURE) Following is the consolidated information worksheet. December 31, 2018, trial balances Pecos Suaro revenues $ (1,052,000) $ (427,000) operating expenses $ 821,000 $ 262,000 goodwill impairment loss ? income of Suaro ? net income ? $…
Assume a parent company acquired 80% of the outstanding voting common stock of a subsidiary on January 1, 2018. On the acquisition date, the identifiable net assets of the subsidiary had fair values that approximated their recorded book values except for a patent, which had a fair value of $200,000 and no recorded book value. On the date of acquisition, the patent had five years of remaining useful life and the parent company amortizes its intangible assets using straight line amortization. During the year ended December 31, 2019, the subsidiary recorded sales to the parent in the amount of $240,000. On these sales, the subsidiary recorded pre-consolidation gross profits equal to 25%. Approximately 30% of this merchandise remains in the parent’s inventory at December 31, 2019. The following summarized pre-consolidation financial statements are for the parent and the subsidiary for the year ended December 31, 2019: Investor Investee Income statement: Revenues $4,800,000…
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Pushdown Accounting Assume a parent company acquires its subsidiary by paying $1,700,000 for all of the outstanding voting shares of the investee. On the acquisition date, subsidiary's assets and liabilities have individual fair values that equal their book values, except for property equipment with a fair value greater than book value by $150,000 and license with a fair value greater than book value by $250,000. The parent and subsidiary have the following balance sheets immediately after the acquisition, but before any pushdown adjustments by the subsidiary: Parent Parent Subsidiary Assets: Cash & receivables $ 800,000 $ 350,000 Inventory 600,000 200,000 Property & equipment, net 2,300,000 1,025,000 Equity investment 1,700,000 Licenses - 275,000 $ 5,400,000 $ 1,850,000 Liabilities and stockholders' equity: Current liabilities $ 400,000 $ 400,000 Other liabilities 300,000 - Note payable - 600,000 Common stock 1,670,000…
In a prior year, a wholly-owned subsidiary sold land costing $100,000 to its parent for $125,000. In the current year, the parent sold the land to an outside company for $170,000. On a working paper prepared to consolidate the accounts of the parent and its subsidiary at the end of the current year, the eliminating entry connected with this land sale includes Select one: a. a $25,000 debit to the investment in subsidiary account b. a $45,000 debit to beginning retained earnings c. a $25,000 credit to gain on sale of land Od. no entry; the land is no longer in the consolidated entity O O
Assume a parent company owns a 100% controlling interest in its long-held subsidiary. The following excerpts are from the parent’s and subsidiary’s pre-consolidation income statements for the year ending December 31, 2019: Parent Subsidiary Revenues $3,000,000 $2,000,000 Cost of goods sold (2,250,000) (1,300,000) Gross profit $750,000 $700,000 On January 1, 2019, the subsidiary held no inventories purchased from the parent. During the year ending December 31, 2019, the parent company sold $400,000 of inventory to its subsidiary. All of the parent’s sales to affiliates and non-affiliates have the same gross margin. At December 31, 2019, the subsidiary still held in its inventory $120,000 of merchandise purchased from the parent. The remaining inventory was sold to unaffiliated third-party customers during the year ended December 31, 2020. Intercompany sales, profits in ending inventoryWhat amount of gross profit will be reported in the consolidated…