Chapter 3, Problem 16P

Arcadia, Incorporated, acquired 100 percent of the voting shares of Bruno Company on January 1, 2023. In exchange, Arca $461,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Arcadia's stock had a fair per share. The combination is a statutory merger with Bruno subsequently dissolved as a legal corporation. Bruno's assets liabilities are assigned to a new reporting unit. The following shows fair values for the Bruno reporting unit for January 1, 2023, along with respective carrying amounts or 31, 2024. Bruno Reporting Unit Cash Receivables Inventory Patents Royalty agreements. Equipment (net) Goodwill Accounts payable Long-term liabilities Note: Parentheses indicate a credit balance. Fair Values 1/1/23 $ 89,000 189,750 218,750 776,500 586,000 355,000 ? (114,500) (591,500) Required: a. Calculate the goodwill recognized in the combination. Carrying Amounts $ 48,000 243,000 12/31/24 258,000 860,000 546,000 269,000 452,000 (184,000) (518,000)

Francisco Inc. acquired 100 percent of the voting shares of Beltran Company on January 1, 2017. In exchange, Francisco paid $450,000 in cash and issued 104,000 shares of its own $1 par value common stock. On this date, Francisco’s stock had a fair value of $12 per share. The combination is a statutory merger with Beltran subsequently dissolved as a legal corporation. Beltran’s assets and liabilities are assigned to a new reporting unit.The following reports the fair values for the Beltran reporting unit for January 1, 2017, and December 31, 2018, along with their respective book values on December 31, 2018.a. Prepare Francisco’s journal entry to record the assets acquired and the liabilities assumed in the Beltran merger on January 1, 2017.b. On December 31, 2018, Francisco opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Beltran reporting unit is $1,425,000. What amount of goodwill impairment, if any, should Francisco…

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Rivendell Corporation and Foster Company merged as of January 1, 2019. To effect the merger, Rivendell paid finder's fees of $40,000, legal fees of $13,000, audit fees related to the stock issuance of $10,000, stock registration fees of $5,000, and stock listing application fees of $4,000. Based on the preceding information, under the acquisition method, what amount relating to the business combination would be expensed Select one: a. 53,000 b. 72,000 c. 19,000 d. 63,000

Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, in exchange for $5,936,500 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias's stockholders' equity was $2,015,000 including retained earnings of $1,515,000. At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: Consideration transferred Mathias stockholders' equity Excess fair over book value to unpatented technology (8-year remaining life) $ 5,936,500 2,015,000 $ 3,921,500 to patents (10-year remaining life) to increase long-term debt (undervalued, 5-year remaining life) Goodwill $ 824,000 2,530,000 (115,000) 3,239,000 $ 682,500 Postacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business combination, Mathias reports the…

Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, in exchange for $6,059,500 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias’s stockholders’ equity was $2,045,000 including retained earnings of $1,545,000. At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: Consideration transferred   $ 6,059,500 Mathias stockholders' equity   2,045,000 Excess fair over book value   $ 4,014,500 to unpatented technology (8-year remaining life) $ 872,000   to patents (10-year remaining life) 2,590,000   to increase long-term debt (undervalued, 5-year remaining life) (145,000) 3,317,000 Goodwill   $ 697,500 Postacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the business…

Allison Corporation acquired all of the outstanding voting stock of Mathias, Incorporated, on January 1, 2023, in exchange for $6,203,000 in cash. Allison intends to maintain Mathias as a wholly owned subsidiary. Both companies have December 31 fiscal year-ends. At the acquisition date, Mathias’s stockholders’ equity was $2,080,000 including retained earnings of $1,580,000. At the acquisition date, Allison prepared the following fair-value allocation schedule for its newly acquired subsidiary: Consideration transferred         $ 6,203,000Mathias stockholders' equity         2,080,000Excess fair over book value         $ 4,123,000to unpatented technology (8-year remaining life)    $ 928,000     to patents (10-year remaining life)    2,660,000     to increase long-term debt (undervalued, 5-year remaining life)    (180,000)    3,408,000Goodwill         $ 715,000Postacquisition, Allison employs the equity method to account for its investment in Mathias. During the two years following the…

On January 3, 2022, Persoff Corporation acquired all of the outstanding voting stock of Sea Cliff, Incorporated, in exchange for $6,652,000 in cash. Persoff elected to exercise control over Sea Cliff as a wholly owned subsidiary with an independent accounting system. Both companies have December 31 fiscal year-ends. At the acquisition date, Sea Cliff's stockholders' equity was $2,522,000 including retained earnings of $1,722,000. Persoff pursued the acquisition, in part, to utilize Sea Cliff's technology and computer software. These items had fair values that differed from their values on Sea Cliff's books as follows: Asset Patented technology Computer software Book Value $ 150,000 Fair Value $ 2,390,000 Remaining Useful Life 7 years $ 66,000 $ 1,746,000 12 years Sea Cliff's remaining identifiable assets and liabilities had acquisition-date book values that closely approximated fair values. Since acquisition, no assets have been impaired. During the next three years, Sea Cliff reported…

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