G 1 Goodwill (13) In late July 2020, Flint Ltd., a private company, paid $2 million to acquire all of the net assets of Pina Colada Corp., which then became a division of Flint. Pina Colada reported the following statement of financial position at the time of acquisition: 2 4 5 Current assets Non-current assets 00 W $415,000 1,335,000 Current liabilities Long-term liabilities Shareholders' equity $300,000 265,000 1,185,000 $1,750,000 6 7 $1,750,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pina Colada was $1.6 million. Over the next six months of operations, the new division had operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2020, the fair value of the Pina Colada Division is $1,800,000, and the division reports the following statement of financial position information: 9 10 11 Current assets $461,000 Non-current assets (including 2,300,000 12 goodwill recognized in purchase) 13 Current liabilities -702,000 14 Long-term liabilities _527.000 15 Net assets $1,532,000 16 17 Assume that Flint Ltd. prepares financial statements in accordance with ASPE. Goodwill (V3) New... K L M B D E F G 10 11 Current assets $461,000 Non-current assets (including 2,300,000 12 goodwill recognized in purchase) 13 Current liabilities -702,000 14 Long-term liabilities 527.000 15 Net assets $1.532.000 16 17 Assume that Flint Ltd. prepares financial statements in accordance with ASPE. 18 19 Instructions 20 a) Calculate the amount of goodwill, if any, that should be recognized in late July 2020. (2 marks) b) Assume that the fair value of the Pina Colada Division on December 31, 2020, is $1.3 million. Determine the loss on impairment, if 21 any, that would be recognized. (2 marks) 22 c) Prepare the journal entry to record the loss on impairment, if any. (2 marks) 23 24 Please use the space below to show support for your calculations. 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Please provide your complete journal entry (omit explanations) in the table below. Date Accounts Debit Credit 44 45 46 47 48 11 Goodwill (V3) New... G 1 Goodwill (13) In late July 2020, Flint Ltd., a private company, paid $2 million to acquire all of the net assets of Pina Colada Corp., which then became a division of Flint. Pina Colada reported the following statement of financial position at the time of acquisition: 2 4 5 Current assets Non-current assets 00 W $415,000 1,335,000 Current liabilities Long-term liabilities Shareholders' equity $300,000 265,000 1,185,000 $1,750,000 6 7 $1,750,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Pina Colada was $1.6 million. Over the next six months of operations, the new division had operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2020, the fair value of the Pina Colada Division is $1,800,000, and the division reports the following statement of financial position information: 9 10 11 Current assets $461,000 Non-current assets (including 2,300,000 12 goodwill recognized in purchase) 13 Current liabilities -702,000 14 Long-term liabilities _527.000 15 Net assets $1,532,000 16 17 Assume that Flint Ltd. prepares financial statements in accordance with ASPE. Goodwill (V3) New... K L M B D E F G 10 11 Current assets $461,000 Non-current assets (including 2,300,000 12 goodwill recognized in purchase) 13 Current liabilities -702,000 14 Long-term liabilities 527.000 15 Net assets $1.532.000 16 17 Assume that Flint Ltd. prepares financial statements in accordance with ASPE. 18 19 Instructions 20 a) Calculate the amount of goodwill, if any, that should be recognized in late July 2020. (2 marks) b) Assume that the fair value of the Pina Colada Division on December 31, 2020, is $1.3 million. Determine the loss on impairment, if 21 any, that would be recognized. (2 marks) 22 c) Prepare the journal entry to record the loss on impairment, if any. (2 marks) 23 24 Please use the space below to show support for your calculations. 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 Please provide your complete journal entry (omit explanations) in the table below. Date Accounts Debit Credit 44 45 46 47 48 11 Goodwill (V3) New