Parent Inc. acquired 100 percent of the voting shares of Subsidiary Company on January 1, 2020....

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Parent Inc. acquired 100 percent of the voting shares of Subsidiary Company on January 1, 2020. In exchange, Parent paid $307,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Parent's stock had a fair value of $15 per share. The combination is a statutory merger with Subsidiary subsequently dissolved as a legal corporation. Subsidiary's assets and liabilities are assigned to a new reporting unit under the parent company. The following shows fair values for the Subsidiary reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. Subsidiary Reporting Unit Cash Fair Values Carrying Amounts 1/1/20 12/31/21 45,000 240,000 255,000 578,000 $ 80,000 $ Receivables 197,500 Inventory 222,000 Patents 495,500 Customer relationships 650,000 620,000 Equipment (net) 368,500 281,000 Goodwill ? 554,000 Accounts payable (154,500) Long-term liabilities (606,000) (233,000) (546,000) Note: Parentheses indicate a credit balance. a. To consolidate with the subsidiary, please prepare Parent's journal entry to record the assets acquired and the liabilities assumed in the Subsidiary merger on January 1, 2020. Note: Enter cash paid and cash received as two separate amounts. Don't combine them. b. Assume the parent assesses the value of the goodwill annually. On December 31, 2021, Parent opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Subsidiary reporting unit is $1,670,000. What amount of goodwill impairment, if any, should Parent recognize on its 2021 income statement? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required Required A B On December 31, 2021, Alfonso opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire BelAire reporting unit is $1,670,000. What amount of goodwill impairment, if any, should Alfonso recognize on its 2021 income statement? Goodwill impairment $ 92,000X loss < Required A Required B > Show less Parent Inc. acquired 100 percent of the voting shares of Subsidiary Company on January 1, 2020. In exchange, Parent paid $307,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Parent's stock had a fair value of $15 per share. The combination is a statutory merger with Subsidiary subsequently dissolved as a legal corporation. Subsidiary's assets and liabilities are assigned to a new reporting unit under the parent company. The following shows fair values for the Subsidiary reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021. Subsidiary Reporting Unit Cash Fair Values Carrying Amounts 1/1/20 12/31/21 45,000 240,000 255,000 578,000 $ 80,000 $ Receivables 197,500 Inventory 222,000 Patents 495,500 Customer relationships 650,000 620,000 Equipment (net) 368,500 281,000 Goodwill ? 554,000 Accounts payable (154,500) Long-term liabilities (606,000) (233,000) (546,000) Note: Parentheses indicate a credit balance. a. To consolidate with the subsidiary, please prepare Parent's journal entry to record the assets acquired and the liabilities assumed in the Subsidiary merger on January 1, 2020. Note: Enter cash paid and cash received as two separate amounts. Don't combine them. b. Assume the parent assesses the value of the goodwill annually. On December 31, 2021, Parent opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Subsidiary reporting unit is $1,670,000. What amount of goodwill impairment, if any, should Parent recognize on its 2021 income statement? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Required Required A B On December 31, 2021, Alfonso opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire BelAire reporting unit is $1,670,000. What amount of goodwill impairment, if any, should Alfonso recognize on its 2021 income statement? Goodwill impairment $ 92,000X loss < Required A Required B > Show less

Answer rating: 100% (QA)

Required A Journal Entry for Acquisition Parent Company Journal Entry on January 1 2020 Account Debit Credit Cash 307000 Common Stock 1 par value 1000... View the full answer