During Year 1, Evergreen Corporation had been negotiating to purchase all of Pine Company's noncash assets...

 

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During Year 1, Evergreen Corporation had been negotiating to purchase all of Pine Company's noncash assets and to assume all of its liabilities for a single cash price. The target closing date is January 1 of Year 2. Evergreen requested, and was provided, considerable data, including the following midyear balance sheet (summarized). Evergreen also independently estimated fair values of the assets and liabilities for each category provided on the balance sheet of Pine Co. Book Value Balance Sheet, June 30, Year 1 from Pine Co. Assets Cash Accounts receivable* Inventory Property, plant, and equipment* Land Franchise (unamortized balance) Total Liabilities Current liabilities Bonds payable Equity Stockholders' equity Total Required X Accounts Receivable Account Name Franchise Goodwill * Net of the allowance for doubtful accounts and accumulated depreciation, respectively. **Cash will not be purchased by Evergreen Corporation. Inventory Property, Plant, and Equipment Land $34,200 108,000 252,000 540,000 19,800 36,000 $990,000 558,000 $990,000 a. Compute the amount of goodwill recorded by Evergreen Corporation for this purchase assuming that Pine Company is created as a new segment of Evergreen, that all goodwill is assigned to that segment, and the purchase price is $480,600. Goodwill: $0 $72,000 360,000 b. Provide the entry for Evergreen Corporation to record the purchase of Pine Company. + + # + # # + + # Current Liabilities Bonds Payable Cash To record purchase of Pine Company Fair Value Developed by Evergreen Corp. $0** 104,400 162,000 513,000 72,000 37,800 $889,200 $66,600 360,000 Dr. 0 0 0 0 0 0 0 0 0 Cr. 0x 0x 0x 0x 0x 0x 0x 0x 34,200 x c. Provide the entry (if any) at the end of Year 2 to adjust goodwill for impairment assuming the following information. •Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). ↑ a. Compute the amount of goodwill recorded by Evergreen Corporation for this purchase assuming that Pine Company is created as a new segment of Evergreen, that all goodwill is assigned to that segment, and the purchase price is $480,600. Goodwill: $0 b. Provide the entry for Evergreen Corporation to record the purchase of Pine Company. Accounts Receivable X Franchise Goodwill. Account Name Inventory Property, Plant, and Equipment Land Current Liabilities Bonds Payable Cash To record purchase of Pine Company Date Year 2 + + + + + + + + + Carrying value of the segment $450,000 Fair value of the segment 414,000 Account Name c. Provide the entry (if any) at the end of Year 2 to adjust goodwill for impairment assuming the following information. •Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). To record year-end adjustment Dr. + + 0 0 0 0 0 0 0 0 0 Dr. Cr. 0 0 0x 0x 0x 0x 0x 0x 0x 0x 34,200 x Cr. 0x 0x During Year 1, Evergreen Corporation had been negotiating to purchase all of Pine Company's noncash assets and to assume all of its liabilities for a single cash price. The target closing date is January 1 of Year 2. Evergreen requested, and was provided, considerable data, including the following midyear balance sheet (summarized). Evergreen also independently estimated fair values of the assets and liabilities for each category provided on the balance sheet of Pine Co. Book Value Balance Sheet, June 30, Year 1 from Pine Co. Assets Cash Accounts receivable* Inventory Property, plant, and equipment* Land Franchise (unamortized balance) Total Liabilities Current liabilities Bonds payable Equity Stockholders' equity Total Required X Accounts Receivable Account Name Franchise Goodwill * Net of the allowance for doubtful accounts and accumulated depreciation, respectively. **Cash will not be purchased by Evergreen Corporation. Inventory Property, Plant, and Equipment Land $34,200 108,000 252,000 540,000 19,800 36,000 $990,000 558,000 $990,000 a. Compute the amount of goodwill recorded by Evergreen Corporation for this purchase assuming that Pine Company is created as a new segment of Evergreen, that all goodwill is assigned to that segment, and the purchase price is $480,600. Goodwill: $0 $72,000 360,000 b. Provide the entry for Evergreen Corporation to record the purchase of Pine Company. + + # + # # + + # Current Liabilities Bonds Payable Cash To record purchase of Pine Company Fair Value Developed by Evergreen Corp. $0** 104,400 162,000 513,000 72,000 37,800 $889,200 $66,600 360,000 Dr. 0 0 0 0 0 0 0 0 0 Cr. 0x 0x 0x 0x 0x 0x 0x 0x 34,200 x c. Provide the entry (if any) at the end of Year 2 to adjust goodwill for impairment assuming the following information. •Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). ↑ a. Compute the amount of goodwill recorded by Evergreen Corporation for this purchase assuming that Pine Company is created as a new segment of Evergreen, that all goodwill is assigned to that segment, and the purchase price is $480,600. Goodwill: $0 b. Provide the entry for Evergreen Corporation to record the purchase of Pine Company. Accounts Receivable X Franchise Goodwill. Account Name Inventory Property, Plant, and Equipment Land Current Liabilities Bonds Payable Cash To record purchase of Pine Company Date Year 2 + + + + + + + + + Carrying value of the segment $450,000 Fair value of the segment 414,000 Account Name c. Provide the entry (if any) at the end of Year 2 to adjust goodwill for impairment assuming the following information. •Note: If a journal entry isn't required on any of the dates shown, select "N/A-debit" and "N/A-credit" as the account names and leave the Dr. and Cr. answers blank (zero). To record year-end adjustment Dr. + + 0 0 0 0 0 0 0 0 0 Dr. Cr. 0 0 0x 0x 0x 0x 0x 0x 0x 0x 34,200 x Cr. 0x 0x

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