Purity Company acquired all of the net assets of Soltice Company on November $1,20$X$1.$ As a result, Soltice became a $100\%$ owned subsidiary of Purity. After allocating the cost of the net acquisition to the net assets of Soltice, the remainder $($$$100,000)$ was reported in the December $31,20$X$1$ balance sheet as goodwill.

During $20$X$2,$ Purity determined that the Soltice office building was undervalued by $$40,000$ when its provisional amount was determined. Purity depreciates the building using the straight$-$line method over a $20-$year period, beginning November $1,20$X$1.$

Address the following questions assuming a tax rate of $40\%.$

At what amount will goodwill now be adjusted to$?$

Under current accounting practice, how will Soltice treat the $$40,000$ change? Explain and show the journal entry$($ies$)$ required.

Under the proposed exposure draft, issued as a part of the FASB's Simplification Initiative, how will Sotice treat the $$40,000$ change? Explain and show the journal entry$($ies$).$