On July 1, 2020, Z Corporation purchased the net assets of S Company by paying $415,000 cash and issuing a $50,000 note payable to S Company. At July 1, 2020, the statement of financial position of Shina Company was as follows: Cash $75,000 Accounts payable $300,000 Accounts receivable 102,000 Shina, capital 239,000 Inventory 98,000 $539,000 Land 50,000 Buildings (net) 75,000 Equipment (net) 90,000 Trademarks (net) 49,000 $539,000 The recorded amounts all approximate current values except for land (worth $60,000), inventory (worth $125,000), and trademarks (worthless). The receivables are shown net of an allowance for doubtful accounts of $12,000. The amounts for buildings, equipment, and trademarks are shown net of accumulated amortization of $14,000, $23,000, and $47,000, respectively.

Instructions

(a) Prepare the July 1, 2020 entry for Z Corporation to record the purchase.

(B) ) Assume that Z is a private entity and tested its goodwill for impairment on December 31, 2021. Management determined that the reporting unit's carrying amount (including goodwill) was $500,000 and that the reporting unit's fair value (including goodwill) was $450,000. Determine if there is any impairment and prepare any necessary entry on December 31, 2021. Z applies ASPE.

(C) ) What is the impact or change if part (a) is repeated, assuming that the purchase price was $204,000, all paid in cash?

(D) Based on part (a), assume now that Z is a public entity and tested its goodwill for impairment on December 31, 2021. The cash-generating unit's values (including goodwill) are as follows: Carrying amount $500,000 Value in use 475,000 Fair value 450,000 Disposal costs 25,000 Determine if there is any impairment and prepare any necessary entry on December 31, 2021.

(E) ) Based on part (a), discuss factors that Z may have considered in deciding to pay total consideration of $465,000 for S