HAMAD TOWN Co. agreed and paid cash of $600,000 to purchase ZALLAQ Co. which has the...

 

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HAMAD TOWN Co. agreed and paid cash of $600,000 to purchase ZALLAQ Co. which has the following statement of financial position as of December 31, 2019: ZALLAQ Co. Statement of Financial Position Buildings Machines (net) Inventory Accounts Receivables Cash Total Assets $175,000 50,000 80,500 115,000 52,500 $473,000 Equity and Liabilities Share Capital-Ordinary Retained Earnings Accounts Payable Total. $115,000 225,000 133,000 $473,000 The two companies agreed on the following fair values for: Buildings is $210,000; Inventory is $85,000; and Machines (net) is $52,500. Also they agreed that no change on all other assets and liabilities. Required: (1) Prepare the journal entry for HAMAD TOWN Co. to record the acquisition of ZALLAQ Co. (2) On 31 Dec 2020, suppose that the carrying amount of net assets (including goodwill) is $515,000 and the recoverable amount is $490,000. Determin and record the impairment loss (if any), if no imparment, write "No Entry". HAMAD TOWN Co. agreed and paid cash of $600,000 to purchase ZALLAQ Co. which has the following statement of financial position as of December 31, 2019: ZALLAQ Co. Statement of Financial Position Buildings Machines (net) Inventory Accounts Receivables Cash Total Assets $175,000 50,000 80,500 115,000 52,500 $473,000 Equity and Liabilities Share Capital-Ordinary Retained Earnings Accounts Payable Total. $115,000 225,000 133,000 $473,000 The two companies agreed on the following fair values for: Buildings is $210,000; Inventory is $85,000; and Machines (net) is $52,500. Also they agreed that no change on all other assets and liabilities. Required: (1) Prepare the journal entry for HAMAD TOWN Co. to record the acquisition of ZALLAQ Co. (2) On 31 Dec 2020, suppose that the carrying amount of net assets (including goodwill) is $515,000 and the recoverable amount is $490,000. Determin and record the impairment loss (if any), if no imparment, write "No Entry".

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