Question

On July 1, 2014, Zoe Corporation purchased the net assets of Soorya Company 10) by paying $415,000 cash and issuing a $50,000 note payable to Soorya Company. At July 1, 2014, the statement of financial position of Soorya Company was as follows:
Cash ................... $75,000
Accounts receivable ............ 102,000
Inventory ................ 98,000
Land ................. 50,000
Buildings (net) ............. 75,000
Equipment (net) .............. 90,000
Trademarks (net) ............ 49,000
$539,000
Accounts payable ............ $300,000
Soorya, capital ............ 239,000
$539,000
The recorded amounts all approximate current values except for land (worth $60,000), inventory (worth $125,000), and trademarks (wonhless). The receivables are shown net of an allowance for doubtful accounts of$12,000. The amounts for buildings, equipment, and trademarks are shown net of accumulated amortization of 514,000, $23,000, and $47,000, respectively.
Instructions
(a) Prepare the July I, 2014 entry for Zoe Corporation to record the purchase.
(b) Assume that Zoe is a private entity and tested its goodwill for impairment on December 31, 2015. Management determined that the reporting unit's carrying amount (including goodwill) was $500,000 and that the reporting unit's fair value (including goodwill) was 5450,000. Determine if there is any impairment and prepare any necessary entry on December 31, 20! 5. Zoe applies ASPE.
(c) Repeat part (a), assuming that the purchase price was $204,000, all paid in cash.
(d) Based on part (a), assume now that Zoe is a public entity and tested its goodwill for impairment on December 31, 2015. The cash-generating units values (including goodwill) are as follows:
Carrying amount ............... $500,000
Value in use ................ 475,000
Fair value ................. 450,000
Disposal costs ............... 25,000
Determine if there is any impairment and prepare any necessary entry on December 31, 201 5.
(e) Based on part (a), discuss factors that Zoe may have considered in deciding to pay total consideration of $465,000 for Soorya.


$1.99
Sales1
Views44
Comments0
  • CreatedSeptember 18, 2015
  • Files Included
Post your question
5000