On December 31, 2015, Cola Company acquired all of the net identifiable assets of The Party...

Transcribed Image Text:

On December 31, 2015, Cola Company acquired all of the net identifiable assets of The Party Place for $370,000 in cash. The book values and fair values of assets and liabilities belonging to The Party Place were as follows: a) Calculate the amount paid for goodwill, Please make sure your final answer(s) are accurate to the nearest whole number, The Party Place Balance Sheet Goodwill = $ December 31, 2015 b) Give the entry for Cola Company to record the purchase of The Party Place. Enter an appropriate description, and enter the date in the format dd/mmm (i.e., 15/Jan). Please make sure your final answer(s) are accurate to 2 decimal places. Book Value Fair Value Assets General Journal $20,000 40,000 $20,000 42,000 Date Page G1 PR Debit Credit Cash. Account/Explanation PR Debit Credit Accounts receivable, net, Inventory Building, net, 130,000 144,000 20,000 80,000 115,000 Patents, net. 19,000 Total assets $354,000 Liabilities and shareholders' equity Accounts payable, $32,000 $27,000 Shareholders' equity, 322,000 not applicable Total liabilities and shareholders' equity. $354,000 c) The goodwill identified in part a) and b) above forms part of a reporting or cash-generating unit (CGU) as a whole. On December 31, 2016, this CGU had the following net assets at the carrying values listed below: Carrying Value $130,000 Cash Accounts receivable, net Inventory Building, net Patents, net 110,000 80,000 110,000 16,000 Goodwill 90,000 Accounts payable 65,000 The account balances above have normal values. The fair value of the CGU on this date was $501,000. Management also detemined that its value in use was $501,000 and the costs to sell the CGU, should management choose to do so would be $15,000. Please make sure your final answer(s) are accurate to 2 decimal places. i) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows ASPE. General Jourmal Account/Explanation Page G1 PR Debit Credit Date ii) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows IFRS. General Journal Account/Explanation Page G1 PR Debit Credit Date d) Assume the same carrying values as listed in part c) above but assume now that the fair value of the CGU on this date was $437,000. Management also determined that its value in use was $437,000 and costs to sell the CGU, should management choose to do so would be $15,000. Please make sure your final answer(s) are accurate to 2 decimal places. i) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows ASPE. Page G1 PR Debit Credit General Joumal Date Account/Explanation ii) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows IFRS. General Joumal Account/Explanation Page G1 PR Debit Credit Date On December 31, 2015, Cola Company acquired all of the net identifiable assets of The Party Place for $370,000 in cash. The book values and fair values of assets and liabilities belonging to The Party Place were as follows: a) Calculate the amount paid for goodwill, Please make sure your final answer(s) are accurate to the nearest whole number, The Party Place Balance Sheet Goodwill = $ December 31, 2015 b) Give the entry for Cola Company to record the purchase of The Party Place. Enter an appropriate description, and enter the date in the format dd/mmm (i.e., 15/Jan). Please make sure your final answer(s) are accurate to 2 decimal places. Book Value Fair Value Assets General Journal $20,000 40,000 $20,000 42,000 Date Page G1 PR Debit Credit Cash. Account/Explanation PR Debit Credit Accounts receivable, net, Inventory Building, net, 130,000 144,000 20,000 80,000 115,000 Patents, net. 19,000 Total assets $354,000 Liabilities and shareholders' equity Accounts payable, $32,000 $27,000 Shareholders' equity, 322,000 not applicable Total liabilities and shareholders' equity. $354,000 c) The goodwill identified in part a) and b) above forms part of a reporting or cash-generating unit (CGU) as a whole. On December 31, 2016, this CGU had the following net assets at the carrying values listed below: Carrying Value $130,000 Cash Accounts receivable, net Inventory Building, net Patents, net 110,000 80,000 110,000 16,000 Goodwill 90,000 Accounts payable 65,000 The account balances above have normal values. The fair value of the CGU on this date was $501,000. Management also detemined that its value in use was $501,000 and the costs to sell the CGU, should management choose to do so would be $15,000. Please make sure your final answer(s) are accurate to 2 decimal places. i) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows ASPE. General Jourmal Account/Explanation Page G1 PR Debit Credit Date ii) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows IFRS. General Journal Account/Explanation Page G1 PR Debit Credit Date d) Assume the same carrying values as listed in part c) above but assume now that the fair value of the CGU on this date was $437,000. Management also determined that its value in use was $437,000 and costs to sell the CGU, should management choose to do so would be $15,000. Please make sure your final answer(s) are accurate to 2 decimal places. i) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows ASPE. Page G1 PR Debit Credit General Joumal Date Account/Explanation ii) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows IFRS. General Joumal Account/Explanation Page G1 PR Debit Credit Date

Answer rating: 100% (QA)

A Amount paid for Goodwill Purchase consideration Fair value of net identifiable assets Purchase con... View the full answer