Grand Champion Inc. purchased America's Best Corporation on January 1, Year 1. At the time, America's Best had the following assets and liabilities (stated at fair value): Cash Accounts receivable Inventory Property, plant, and equipment Patent Accounts payable Notes payable $63,000 137,000 180,000 300,000 65,000 180,000 325,000

Grand Champion Inc. purchased America's Best Corporation on January 1, Year 1. At the time, America's Best had the following assets and liabilities (stated at fair value): Cash Accounts receivable Inventory Property, plant, and equipment Patent Accounts payable Notes payable $63,000 137,000 180,000 300,000 65,000 180,000 325,000

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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Question

Required:

1. Calculate the impairment loss of goodwill (if any).

2. Record the appropriate journal entry.

Grand Champion Inc. purchased America's Best Corporation on January 1, Year 1. At the time, America's Best had the following assets and liabilities (stated at fair value):
Cash
Accounts receivable
Inventory
Property, plant, and equipment
Patent
Accounts payable
Notes payable
$63,000
137,000
180,000
300,000
65,000
180,000
325.000
Grand Champion paid $900,000 for America's Best. Assume that America's Best is a reporting unit of Grand Champion. At the end of Year 2, America's Best has a fair value of $720,000 and a book value of $890,000, which includes any
goodwill recorded. Of this fair value, $340,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities.

Definition Definition Method of recording financial transactions in the book of original entry by debiting and crediting the accounts affected by a transaction using the golden rules of accrual accounting.

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