The financial statements of Niall's Foods for the year ended December 31, 2016, reported the following details of acquisitions (adapted): In thousands
Assets:
Cash.........................................................$ 3,400
Accounts receivable..........................................8,400
Equipment....................................................72,000
Intangibles......................................................700
...............................................................$84,500
Liabilities:
Long-term debt...........................................$16,400
Niall's Foods paid $91,000 cash for the acquisitions. Assume that the book value of the assets is equal to their fair value.
Required
1. How much goodwill did Niall's Foods purchase as part of the 2016 acquisitions?
2. Prepare the summary journal entry to record the acquisition at December 31, 2016.
3. Assume that, in 2017, the annual review of goodwill at December 31 identified a 15 percent impairment of the goodwill acquired in 2016. Prepare the journal entry required to record this impairment.