Stockholders of Riverbed Company, Pronghorn Company, and Pina Colada Company are considering alternative arrangements for a...

  

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Stockholders of Riverbed Company, Pronghorn Company, and Pina Colada Company are considering alternative arrangements for a business combination. Balance sheets and the fair values of each company's assets on October 1, 2024, were as follows: Assets Liabilities Common stock, $20 par value Other contributed capital Retained earnings (deficit) Total equities Fair values of assets Riverbed $3,927,780 $2,040,400 1.982,200 -0- (94,820) $3.927.780 $4,239,310 Pronghorn $7,474,300 $2,209,490 1,811,520 605,720 2,847,570 $7,474,300 $9,073,000 Pina Colada $950,270 $260,980 539,260 189,620 (39,590) $950,270 $1,303,580 Riverbed Company shares have a fair value of $53. A fair (market) price is not available for shares of the other companies because they are closely held. Fair values of liabilities equal book values. Prepare a balance sheet for the business combination. Assume the following: Riverbed Company acquires all the assets and assumes all the liabilities of Pronghorn and Pina Colada Companies by issuing in exchange 139,200 shares of its common stock to Pronghorn Company and 39,880 shares of its common stock to Pina Colada Company. (List assets in order of liquidity. Enter negative account balance with negative sign preceding the number e.g. -5,125 or parentheses e.g. (5,125).) Assets (except goodwill) Goodwill Total Assets Liabilities Common Stock Retained Earnings RIVERBED COMPANY Balance Sheet October 1, 2024 Other Contributed Capital Assets Total Liabilities and Stockholders' Equity $ $ Liabilities and Stockholders' Equity $ V $ Assume, further, that the acquisition was consummated on October 1, 2024, as described above. However, by the end of 2025, Riverbed was concerned that the fair values of one or both of the acquired units had deteriorated. To test for impairment, Riverbed decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting units (Pronghorn and Pina Colada). Riverbed accumulated the following data: Year 2055 Pronghorn Pina Colada Present Value of Future Cash Flows $6,556.800 $1,916,000 * Identifiable Net Assets do not include goodwill. Account Titles and Explanation Impairment Loss Goodwill Carrying Value of Identifiable Net Assets* $6,391,510 $1,193,180 Prepare the journal entry, if needed, to record goodwill impairment at December 31, 2025. Use FASB's simplified approach to test for goodwill impairment (assume that the qualitative test is satisfied or bypassed). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Fair Value Identifiable Net Assets Debit $6,401,510 $993,180 Credit Stockholders of Riverbed Company, Pronghorn Company, and Pina Colada Company are considering alternative arrangements for a business combination. Balance sheets and the fair values of each company's assets on October 1, 2024, were as follows: Assets Liabilities Common stock, $20 par value Other contributed capital Retained earnings (deficit) Total equities Fair values of assets Riverbed $3,927,780 $2,040,400 1.982,200 -0- (94,820) $3.927.780 $4,239,310 Pronghorn $7,474,300 $2,209,490 1,811,520 605,720 2,847,570 $7,474,300 $9,073,000 Pina Colada $950,270 $260,980 539,260 189,620 (39,590) $950,270 $1,303,580 Riverbed Company shares have a fair value of $53. A fair (market) price is not available for shares of the other companies because they are closely held. Fair values of liabilities equal book values. Prepare a balance sheet for the business combination. Assume the following: Riverbed Company acquires all the assets and assumes all the liabilities of Pronghorn and Pina Colada Companies by issuing in exchange 139,200 shares of its common stock to Pronghorn Company and 39,880 shares of its common stock to Pina Colada Company. (List assets in order of liquidity. Enter negative account balance with negative sign preceding the number e.g. -5,125 or parentheses e.g. (5,125).) Assets (except goodwill) Goodwill Total Assets Liabilities Common Stock Retained Earnings RIVERBED COMPANY Balance Sheet October 1, 2024 Other Contributed Capital Assets Total Liabilities and Stockholders' Equity $ $ Liabilities and Stockholders' Equity $ V $ Assume, further, that the acquisition was consummated on October 1, 2024, as described above. However, by the end of 2025, Riverbed was concerned that the fair values of one or both of the acquired units had deteriorated. To test for impairment, Riverbed decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting units (Pronghorn and Pina Colada). Riverbed accumulated the following data: Year 2055 Pronghorn Pina Colada Present Value of Future Cash Flows $6,556.800 $1,916,000 * Identifiable Net Assets do not include goodwill. Account Titles and Explanation Impairment Loss Goodwill Carrying Value of Identifiable Net Assets* $6,391,510 $1,193,180 Prepare the journal entry, if needed, to record goodwill impairment at December 31, 2025. Use FASB's simplified approach to test for goodwill impairment (assume that the qualitative test is satisfied or bypassed). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Fair Value Identifiable Net Assets Debit $6,401,510 $993,180 Credit Stockholders of Riverbed Company, Pronghorn Company, and Pina Colada Company are considering alternative arrangements for a business combination. Balance sheets and the fair values of each company's assets on October 1, 2024, were as follows: Assets Liabilities Common stock, $20 par value Other contributed capital Retained earnings (deficit) Total equities Fair values of assets Riverbed $3,927,780 $2,040,400 1.982,200 -0- (94,820) $3.927.780 $4,239,310 Pronghorn $7,474,300 $2,209,490 1,811,520 605,720 2,847,570 $7,474,300 $9,073,000 Pina Colada $950,270 $260,980 539,260 189,620 (39,590) $950,270 $1,303,580 Riverbed Company shares have a fair value of $53. A fair (market) price is not available for shares of the other companies because they are closely held. Fair values of liabilities equal book values. Prepare a balance sheet for the business combination. Assume the following: Riverbed Company acquires all the assets and assumes all the liabilities of Pronghorn and Pina Colada Companies by issuing in exchange 139,200 shares of its common stock to Pronghorn Company and 39,880 shares of its common stock to Pina Colada Company. (List assets in order of liquidity. Enter negative account balance with negative sign preceding the number e.g. -5,125 or parentheses e.g. (5,125).) Assets (except goodwill) Goodwill Total Assets Liabilities Common Stock Retained Earnings RIVERBED COMPANY Balance Sheet October 1, 2024 Other Contributed Capital Assets Total Liabilities and Stockholders' Equity $ $ Liabilities and Stockholders' Equity $ V $ Assume, further, that the acquisition was consummated on October 1, 2024, as described above. However, by the end of 2025, Riverbed was concerned that the fair values of one or both of the acquired units had deteriorated. To test for impairment, Riverbed decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting units (Pronghorn and Pina Colada). Riverbed accumulated the following data: Year 2055 Pronghorn Pina Colada Present Value of Future Cash Flows $6,556.800 $1,916,000 * Identifiable Net Assets do not include goodwill. Account Titles and Explanation Impairment Loss Goodwill Carrying Value of Identifiable Net Assets* $6,391,510 $1,193,180 Prepare the journal entry, if needed, to record goodwill impairment at December 31, 2025. Use FASB's simplified approach to test for goodwill impairment (assume that the qualitative test is satisfied or bypassed). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Fair Value Identifiable Net Assets Debit $6,401,510 $993,180 Credit Stockholders of Riverbed Company, Pronghorn Company, and Pina Colada Company are considering alternative arrangements for a business combination. Balance sheets and the fair values of each company's assets on October 1, 2024, were as follows: Assets Liabilities Common stock, $20 par value Other contributed capital Retained earnings (deficit) Total equities Fair values of assets Riverbed $3,927,780 $2,040,400 1.982,200 -0- (94,820) $3.927.780 $4,239,310 Pronghorn $7,474,300 $2,209,490 1,811,520 605,720 2,847,570 $7,474,300 $9,073,000 Pina Colada $950,270 $260,980 539,260 189,620 (39,590) $950,270 $1,303,580 Riverbed Company shares have a fair value of $53. A fair (market) price is not available for shares of the other companies because they are closely held. Fair values of liabilities equal book values. Prepare a balance sheet for the business combination. Assume the following: Riverbed Company acquires all the assets and assumes all the liabilities of Pronghorn and Pina Colada Companies by issuing in exchange 139,200 shares of its common stock to Pronghorn Company and 39,880 shares of its common stock to Pina Colada Company. (List assets in order of liquidity. Enter negative account balance with negative sign preceding the number e.g. -5,125 or parentheses e.g. (5,125).) Assets (except goodwill) Goodwill Total Assets Liabilities Common Stock Retained Earnings RIVERBED COMPANY Balance Sheet October 1, 2024 Other Contributed Capital Assets Total Liabilities and Stockholders' Equity $ $ Liabilities and Stockholders' Equity $ V $ Assume, further, that the acquisition was consummated on October 1, 2024, as described above. However, by the end of 2025, Riverbed was concerned that the fair values of one or both of the acquired units had deteriorated. To test for impairment, Riverbed decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting units (Pronghorn and Pina Colada). Riverbed accumulated the following data: Year 2055 Pronghorn Pina Colada Present Value of Future Cash Flows $6,556.800 $1,916,000 * Identifiable Net Assets do not include goodwill. Account Titles and Explanation Impairment Loss Goodwill Carrying Value of Identifiable Net Assets* $6,391,510 $1,193,180 Prepare the journal entry, if needed, to record goodwill impairment at December 31, 2025. Use FASB's simplified approach to test for goodwill impairment (assume that the qualitative test is satisfied or bypassed). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry.) Fair Value Identifiable Net Assets Debit $6,401,510 $993,180 Credit

Answer rating: 100% (QA)

RIVERBED COMPANY Balance Sheet October 1 2024 Assets except goodwill Prongh... View the full answer