On July 1, 2020, Carla Vista Corporation acquired Sandhill Company for $981,000 cash. At the time of purchase, Sandhills balance sheet showed assets of $844,750 and liabilities of $272,500. The fair value of Sandhills assets is estimated to be $1,035,500.

(a)

Compute the amount of goodwill acquired by Carla Vista.

Amount of goodwill

$

The following information is available for Cullumber Companys patents:

Cost	$4040000
Carrying amount	2520000
Expected future net cash flows	2188000
Fair value	1600000

Cullumber would record a loss on impairment of

$1852000.

$332000.

$2520000.

$920000.

Bonita Industries, a manufacturer of household paints, is preparing annual financial statements at December 31, 2020. Because of a recently proven health hazard in one of its paints, the government has clearly indicated its intention of having Bonita recall all cans of this paint sold in the last six months. The management of Bonita estimates that this recall would cost $809000. What accounting recognition, if any, should be accorded this situation?

Note disclosure only

No recognition

Operating expense of $809000 and liability of $809000

Appropriation of retained earnings of $809000