1a. Elephant Comp. acquired 100% of the outstanding stock of Silly Corn Corporation (SCC) for $45.6 million, of which $9.6 million was allocated to goodwill. At the end of the current fiscal year, an impairment test revealed the following: Fair value of SCC, $42,6 million, fair value of SCC's net assets (excluding goodwill), $30.6 million; book value of SCC's net assets (including goodwill), $41,6 million. What amount of impairment loss should Elephant recognize?

$0 (Goodwill is not impaired)

$1,000,000

$3,000,000

$4,000,000

$12,000,000

$15,000,000

1b, On July 10, 2014, Tiger Inc. signed a purchase commitment to purchase inventory for $200,000 on or before May 15, 2015. The company's fiscal year-end is December 31. The contract was exercised on May 1, 2015, and the inventory was purchased for cash at the contract price. On the purchase date of May 1, the market price of the inventory was $210,000. The market price of the inventory on December 31, 2014, was $180,000. The company uses a perpetual inventory system. How much loss will Tiger recognize in 2014 from the purchase commitment?

$10,000

$20,000

$30,000

Since the purchase happened in 2014, nothing is recorded in 2013

Since the market price on the purchase date exceeded the contract price, no loss is recorded in 2013

1c. A debit balance in the allowance for uncollectible accounts before the year end adjustment for the current year's uncollectible accounts expense means

That the current year's estimated uncollectible accounts receivable must have been overestimated at the beginning of the year

That the current year's estimated uncollectible accounts receivable must have been underestimated at the beginning of the year

That the current year write-offs of uncollectible accounts receivable were less than the prior year's ending allowance for uncollectible accounts balance

that the direct write-off rather than the allowance method was used to account for uncollectible receivables

1d. Duck Inc. is considering selling their accounts receivable with a carrying amount of $10,000,000 to goose inc. Goose Inc. would assess a finance charge of 10% of the receivables. Duck estimates that $500,000 of the sold receivables will become uncollectible. If the receivables were sold to Goose on a without recourse basis, the journal entry on Duck's books would include:

A loss on Sale of Receivables for $1,000,000

A loss on Sale of Receivables for $1,500,000

A loss on Sale of Receivables for $3,000,000

A loss on Sale of Receivables for $3,500,000

Since Oler received cash in exchange for the receivables, no loss is recorded.

1e. Which of the following is added to Net income as a positive adjustment under the indirect method of preparing the statement of cash flows?

A decrease in Salaries Payable

Loss on the Sale of Equipment

An increase in Accounts Receivable

An increase in inventory

All of the above are added as positive adjustments

None of the above are added as positive adjustments

Answer rating: 100% (QA)

1a Fair value of SCC 426 million Book Value of SCC net assets including Goodwill 416 million Amount ... View the full answer