The December 31, 2021, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date): Innovus Chip Tech Revenues $ (990,000) $(210,000) Cost of goods sold 500,000 90,000 Depreciation expense 100,000 5,000 Amortization expense 55,000 18,000 Dividend income (40,000) -0- Net income $ (375,000) $ (97,000) Retained earnings 1/1/21 $(1,555,000) $(450,000) Net income (375,000) (97,000) Dividends declared 250,000 40,000 Retained earnings 12/31/21 $(1,680,000) $(507,000) Current assets $ 960,000 $ 355,000 Investment in ChipTech 670,000 Equipment (net) 765,000 225,000 Trademark 235,000 100,000 Existing technology -0- 45,000 Goodwill 450,000 -0- Total assets $ 3,080,000 $ 725,000 Liabilities $ (780,000) (88,000) Common stock (500,000) (100,000) Additional paid-in capital (120,000) (30,000) Retained earnings 12/31/21 (1,680,000) (507,000) Total liabilities and equity $(3,080,000) $(725,000) Required a. Using Excel, compute consolidated balances for Innovus and ChipTech. Either use a worksheet approach or compute the balances directly. b. Prepare a second spreadsheet that shows a 2021 impairment loss for the entire amount of goodwill from the ChipTech acquisition.

The December 31, 2021, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date): Innovus Chip Tech Revenues $ (990,000) $(210,000) Cost of goods sold 500,000 90,000 Depreciation expense 100,000 5,000 Amortization expense 55,000 18,000 Dividend income (40,000) -0- Net income $ (375,000) $ (97,000) Retained earnings 1/1/21 $(1,555,000) $(450,000) Net income (375,000) (97,000) Dividends declared 250,000 40,000 Retained earnings 12/31/21 $(1,680,000) $(507,000) Current assets $ 960,000 $ 355,000 Investment in ChipTech 670,000 Equipment (net) 765,000 225,000 Trademark 235,000 100,000 Existing technology -0- 45,000 Goodwill 450,000 -0- Total assets $ 3,080,000 $ 725,000 Liabilities $ (780,000) (88,000) Common stock (500,000) (100,000) Additional paid-in capital (120,000) (30,000) Retained earnings 12/31/21 (1,680,000) (507,000) Total liabilities and equity $(3,080,000) $(725,000) Required a. Using Excel, compute consolidated balances for Innovus and ChipTech. Either use a worksheet approach or compute the balances directly. b. Prepare a second spreadsheet that shows a 2021 impairment loss for the entire amount of goodwill from the ChipTech acquisition.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA2: Investments

Section: Chapter Questions

Problem 23E

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Question

The December 31, 2021, trial balances for the parent and subsidiary follow (there were no intra-entity payables on that date):
Innovus
ChipTech
Revenues
$ (990,000)
$(210,000)
Cost of goods sold
500,000
90,000
Depreciation expense
100,000
5,000
Amortization expense
55,000
18,000
Dividend income
(40,000)
-0-
Net income
$ (375,000)
$ (97,000)
Retained earnings 1/1/21
$(1,555,000)
$(450,000)
Net income
(375,000)
(97,000)
Dividends declared
250,000
40,000
Retained earnings 12/31/21
$(1,680,000)
$(507,000)
Current assets
$
960,000
$ 355.000
Investment in ChipTech
670,000
Equipment (net)
765,000
225,000
Trademark
235,000
100,000
Existing technology
-0-
45,000
Goodwill
450,000
-0-
Total assets
$ 3,080,000
$ 725.000
Liabilities
$ (780,000)
(88,000)
Common stock
(500,000)
(100,000)
Additional paid-in capital
(120,000)
(30,000)
(507,000)
Retained earnings 12/31/21
Total liabilities and equity
(1,680,000)
$(3,080,000)
$(725,000)
Required
a. Using Excel, compute consolidated balances for Innovus and ChipTech. Either use a worksheet approach or compute the balances
directly.
b. Prepare a second spreadsheet that shows a 2021 impairment loss for the entire amount of goodwill from the ChipTech acquisition.

EXCEL CASE 1
Page 152
СРА
skills
On January 1, 2020, Innovus, Inc., acquired 100 percent of the common stock of ChipTech Company for $670,000 in cash and other fair-
value consideration. ChipTech's fair value was allocated among its net assets as follows:
$670,000
Fair value of consideration transferred for ChipTech
Book value of ChipTech:
Common stock and Additional Paid-In Capital (APIC)
Retained earnings
$130,000
370,000
500,000
Excess fair value over book value to
170,000
Trademark (10-year remaining life)
$ 40,000
Existing technology (5-year remaining life)
80,000
120,000
Goodwill
$ 50,000

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