Question 2Piz.5 L03.) (Goodwill, Impairment) On July 31, 2022. Mexico Company paid Se o00.o00 to acquire all of the ordinary shares ofCondhita Incorporated, which became a division (cash-generating unit of Mexico. Conchita reported the following statement of financial positionat the time of the acquisition$2.400,000Non-current assets S2,700,000 EquityCurrent assetsTotal assetsSoo,000 Non-curent liabihties$3.500,000 Current liabilities500,000600.000Total equity and liabilities S3.500,000It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was S2-750,000.Over the next6 monthsof operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for theforeseeable future. At December g1, 2022, Conchita reports the following statement of financial position informationS 450,000Current assetsNon-eurrent assets (including goodwill recognized ia purchase) 2400,000Current liabilitiesNon-current liabilitiesGoo.000)(500,000)$1650.000Net assetsIt is determined that the recoverable amount of the Conchita Dvision is Sa S30.000.Instructionsa. Compute the amount of goodwill recognized, if any, on July 3a 2002b. Determine the impairment loss, if any, to be recorded on December g.2022.CAssume that the recoverable amount of the Conchita Division is Sa.6o0.copinstead of S1850.000. Determine the inpairmentloss itany tobe recorded on December 31, 2o22.d Prepare the journal entry to record the impairment loss. if any, and indicate where the loss soa be reported in the income statement.

a) Goodwill= division Fair value -identifiable assets Fair value

Soo,000 Non-current liabilities 500,00 600.00 500,000 Current lhabilities Total equity and iabilities S3.500,0c alue of the identifiable net assets of Conchita was erating losses. In addition, it nowappears that it v the following statement of financial position info $ 450.0

Soo,000 Non-current liabilities 500,00 600.00 500,000 Current lhabilities Total equity and iabilities S3.500,0c alue of the identifiable net assets of Conchita was erating losses. In addition, it nowappears that it v the following statement of financial position info $ 450.0

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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