Francisco Inc. acquired 100 percent of the voting shares of Beltran Company on January 1, 2017....

 

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Francisco Inc. acquired 100 percent of the voting shares of Beltran Company on January 1, 2017. In exchange, Francisco paid $445,250 in cash and issued 129,000 shares of its own $1 par value common stock. On this date, Francisco's stock had a fair value of $12 per share. The combination is a statutory merger with Beltran subsequently dissolved as a legal corporation. Beltran's assets and liabilities are assigned to a new reporting unit. The following reports the fair values for the Beltran reporting unit for January 1, 2017, and December 31, 2018, along with their respective book values on December 31, 2018. Fair Values Fair Values Book Values Beltran Reporting Unit 1/1/17 12/31/18 12/31/18 $ 143,500 $ 93,500 $ 93,500 Cash 330,000 352,000 630,000 598,000 295,000 Receivables 280,750 324,750 552,500 621,250 393,000 330,000 345,200 Inventory Patents Customer relationships Equipment (net) 503,500 544,250 288,150 Goodwill 484,000 Accounts payable Long-term liabilities (126,500) (680,000) (225,000) (596,000) (225,000) (596,000) a. Prepare Francisco's journal entry to record the assets acquired and the liabilities assumed in the Beltran merger on January 1, 2017. b. On December 31, 2018, Francisco opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Beltran reporting unit is $1,620,750. What amount of goodwill impairment, if any, should Francisco recognize on its 2018 income statement? Francisco Inc. acquired 100 percent of the voting shares of Beltran Company on January 1, 2017. In exchange, Francisco paid $445,250 in cash and issued 129,000 shares of its own $1 par value common stock. On this date, Francisco's stock had a fair value of $12 per share. The combination is a statutory merger with Beltran subsequently dissolved as a legal corporation. Beltran's assets and liabilities are assigned to a new reporting unit. The following reports the fair values for the Beltran reporting unit for January 1, 2017, and December 31, 2018, along with their respective book values on December 31, 2018. Fair Values Fair Values Book Values Beltran Reporting Unit 1/1/17 12/31/18 12/31/18 $ 143,500 $ 93,500 $ 93,500 Cash 330,000 352,000 630,000 598,000 295,000 Receivables 280,750 324,750 552,500 621,250 393,000 330,000 345,200 Inventory Patents Customer relationships Equipment (net) 503,500 544,250 288,150 Goodwill 484,000 Accounts payable Long-term liabilities (126,500) (680,000) (225,000) (596,000) (225,000) (596,000) a. Prepare Francisco's journal entry to record the assets acquired and the liabilities assumed in the Beltran merger on January 1, 2017. b. On December 31, 2018, Francisco opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Beltran reporting unit is $1,620,750. What amount of goodwill impairment, if any, should Francisco recognize on its 2018 income statement?

Answer rating: 100% (QA)

Part A Account titles and explanation Debit Credit Cash 143500 Receivables 280750 Inventory 324750 P... View the full answer