The Brigatti Company pays $ 1,560,000 to acquire 100% of the common stock of Cornish Incorporated. It
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The Brigatti Company pays $ 1,560,000 to acquire 100% of the common stock of Cornish Incorporated. It assumes that Cornish€™s plant assets (such as the factory building and land) are undervalued by $ 40,000. The historical cost of the net assets acquired, excluding goodwill, is equal to $ 1,500,000. Cornish will be held as a division of Brigatti. The following information is available one year after the acquisition of the subsidiary company (i. e., the reporting unit):
Brigatti estimated the fair (appraisal) value of the division€™s net assets (excluding goodwill) at $ 1,605,000 one year after the date of acquisition.
Required a. Compute goodwill recorded on the date of acquisition. b. Determine if goodwill is impaired assuming that the fair value of the Cornish Division with goodwill is equal to $ 2,000,000 one year after acquisition. Provide the impairment journal entry, if needed. c. Determine if goodwill is impaired assuming that the fair value of the Cornish Division with goodwill is equal to $ 1,608,000 one year after acquisition. Prepare the impairment journal entry, if needed.
Common Stock Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on...
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Debit S 200,000 300,000 1,500,000 Description Cash Inventory Property, plant, and equipment, net Goodwill Current liabilities Cammon stock-no par Retained eamings Credit 20,000 S 400,000 340,000 1.280,000 $2020,000 2.020,00 Totals
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a Computation of goodwill on the date of acquisition Account Amount Acquisition cost total considera...View the full answer
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