On August 31, 2020, Southampton Co. acquired all of the common stock of Brighton Company, which...

  

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On August 31, 2020, Southampton Co. acquired all of the common stock of Brighton Company, which became a division of Southampton Co. Brighton Company reported the followir statement of financial position at the time of the acquisition: Assets Plant assets (ne t) Inventory Receivables Cash Total assets Brighton Company Statement of Financial Position $1,350,000 235,000 800,000 422.000 $2.807.000 Equity and Liabilities Share capital- ordinary Retained earnings Accounts payable Total equity and liabilities $1,150,000 1,070,000 587.000 $2.807.000 An appraisal indicated that the fair value of the inventory was $372,000 and the fair value of the plant assets was $1,550,000. The agreed purchase price was $3,600,000, and this amount was paid in cash to the previous owners of Brighton Company. Required: a. Prepare the entry to record the purchase of Brighton Company. b. Assume that the carrying amount of Brighton Company division's net assets, including goodwill is $2.550,000. The recoverable amount of the division is estimated to be S 3,000,000. Prepare the journal entry to record the impairment loss (If any) on December 31, 2020. On August 31, 2020, Southampton Co. acquired all of the common stock of Brighton Company, which became a division of Southampton Co. Brighton Company reported the followir statement of financial position at the time of the acquisition: Assets Plant assets (ne t) Inventory Receivables Cash Total assets Brighton Company Statement of Financial Position $1,350,000 235,000 800,000 422.000 $2.807.000 Equity and Liabilities Share capital- ordinary Retained earnings Accounts payable Total equity and liabilities $1,150,000 1,070,000 587.000 $2.807.000 An appraisal indicated that the fair value of the inventory was $372,000 and the fair value of the plant assets was $1,550,000. The agreed purchase price was $3,600,000, and this amount was paid in cash to the previous owners of Brighton Company. Required: a. Prepare the entry to record the purchase of Brighton Company. b. Assume that the carrying amount of Brighton Company division's net assets, including goodwill is $2.550,000. The recoverable amount of the division is estimated to be S 3,000,000. Prepare the journal entry to record the impairment loss (If any) on December 31, 2020.

Answer rating: 100% (QA)

DATE PARTICULARS DR CR 30122020 Business Purchase ... View the full answer