Question
On December 31, 2015, Cantu Excavating acquired all of the net identifiable assets of CanTech Supply for $350,000 in cash. The book values and fair
On December 31, 2015, Cantu Excavating acquired all of the net identifiable assets of CanTech Supply for $350,000 in cash. The book values and fair values of assets and liabilities belonging to CanTech Supply were as follows:
CanTech Supply Balance Sheet December 31, 2015 . Book value FairValue Assets Cash $26,000. $26,000 Accounts receivable,net 48,000 47,000 Inventory 140,000 70,000 Building, net 145,000 139,000 Patents, net 21,000 20,000 Total assets $380,000 Liabilities and shareholders' equity Accountpayable $32,000 $29,000 Shareholders' equity 348,000 not applicable Total liabilities and shareholders' equity $380,000 | a) Calculate the amount paid for goodwill. Please make sure your final answer(s) are accurate to the nearest whole number. Goodwill = $ b) Give the entry for Cantu Excavating to record the purchase of CanTech Supply. Enter an appropriate description, and enter the date in the format dd/mmm (i.e., 15/Jan). Please make sure your final answer(s) are accurate to 2 decimal places.General JournalPage G1 Date Account/Explanation. PR. Debit Credit
|
c) The goodwill identified in part a) and b) above forms part of a reporting or cash-generating unit (CGU) as a whole. On December 31, 2016, this CGU had the following net assets at the carrying values listed below:
Carrying ValueCash $120,000, Accounts receivable, net. 110,000. Inventory 80,000, Building, net 90,000. Patents, net. 17,000, Goodwill. 100,000 Accounts payable.35,000
The account balances above have normal values. The fair value of the CGU on this date was $450,000. Management also determined that its value in use was $440,000 and the costs to sell the CGU, should management choose to do so would be $20,000. Please make sure your final answer(s) are accurate to 2 decimal places. i) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows ASPE.
General JournalPage G1
Date Account/Explanation PR Debit Credit
ii) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows IFRS.
General JournalPage G1
Date Account/Explanation PR Debit Credit
d) Assume the same carrying values as listed in part c) above but assume now that the fair value of the CGU on this date was $504,000. Management also determined that its value in use was $494,000 and costs to sell the CGU, should management choose to do so would be $20,000. Please make sure your final answer(s) are accurate to 2 decimal places. i) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows ASPE.
General JournalPage G1
Date Account/Explanation PR Debit Credit
ii) Determine if the CGU is impaired and complete the journal entry, if required. Assume that the company follows IFRS.
General JournalPage G1
Date Account/Explanation PR Debit Credit
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started