2) Alfonso Inc. acquired 100 percent of the voting shares of BelAire Company on January 1, 2020. In exchange, Alfonso paid $198,000 in cash and issued 100,000 shares of its own $1 par value common stock. On this date, Alfonsos stock had a fair value of $15 per share. The combination is a statutory merger with BelAire subsequently dissolved as a legal corporation. BelAires assets and liabilities are assigned to a new reporting unit. The following reports the fair values for the BelAire reporting unit for January 1, 2020 along with respective carrying amounts on December 31, 2021.

BelAire Reporting Unit Fair Values 1/1/20 Carrying Amounts 12/31/21

Cash $ 65,000 $ 40,000

Receivables 203,000 235,000

Inventory 275,000 250,000

Patents 531,000 550,000

Customer relationships 580,000 450,000

Equipment (net) 215,000 335,000

Goodwill ? 400,000

Accounts payable (111,000) (275,000)

Long-term liabilities (460,000) (425,000)

a. Prepare Alfonsos journal entry to record the assets acquired and the liabilities assumed in the BelAire merger on January 1, 2020.

b. On December 31, 2021, Alfonso opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire BelAire reporting unit is $1,325,000. What amount of goodwill impairment, if any, should Alfonso recognize on its 2021 income statement?