On January 1, 2020, Boxlight Inc. purchased the net assets from Candelabra Ltd. for

$230,000 cash and a note for $50,000. On that date, Candelabra’s list of balance sheet accounts was:

Carrying value Fair value – if different than carrying value Cash $ 55,000 Accounts receivable (net) 125,000 Inventory 200,000 Land 15,000 $35,000 Buildings (net) 125,000 95,000 Equipment (net) 15,000 5,000 Patent (net) 25,000 0 Customer list (net) 5,000 0 Accounts payable 300,000 Common shares 100,000 Retained earnings 165,000 Accounts receivable is shown net of estimated bad debt of $10,000. Buildings, equipment, patent, and customer list are shown net of depreciation/amortization of $75,000, 15,000, 5,000, and 1,000, respectively.

Required:

a. Prepare the journal entry to record the purchase.

b. What would Boxlight have considered when determining the purchase price for

$280,000?

c. On December 15, 2020, Boxlight suspected a possible impairment of the reporting entity so it assessed the net assets that had a carrying value of $200,000 on that date. Management determined that the fair value of the net assets, including goodwill, was $180,000. Determine if there was any impairment of the reporting entity and record the journal entry, if any. Boxlight follows ASPE.

d. Assume now that Boxlight follows IFRS and assesses the cash-generating unit annually for impairment. How would the answer in part

(c) change, given the CGU’s values as follows:

Carrying amount $180,000 Fair value 160,000 Disposal costs 10,000 Value in use 170,000

e. How would your answer in

(c) and

(d) change if, one year later, there was an increase in the fair value and recoverable amount to $190,000?