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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
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 24E
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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.
Transcribed Image Text: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
Transcribed Image Text: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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