Q12

On August 31, 2020, Southampton Co. acquired all of the common stock of Brighton Company, which became a division of Southampton Co. Brighton Company reported the following statement of financial position at the time of the acquisition: Brighton Company Statement of Financial Position Assets Equity and Liabilities $1,250,000 Share capital- ordinary $1,050,000 Plant assets (ne t) Inventory Receivables 235,000 Retained earnings 970,000 750,000 Accounts payable 575,000 Cash 360,000 Total assets $2,595,000 Total equity and liabilities $2,595,000 An appraisal indicated that the fair value of the inventory was $467,000 and the fair value of the plant assets was $1,450,000. The agreed purchase price was $2,700,000, and this amount was paid in cash to the previous owners of Brighton Company. Required: Activate Windows Go to Settings to activate Win a. Prepare the entry to record the purchase of Brighton Company. b. Assume that the carrying amount of Brighton Company division's net assets, including goodwill is $2,900,000. The recoverable amount of the division is estimated to be $ 2,500,000. Prepare the journal entry to record the impairment loss (If any) on December 31, 2020. For the toolbar press ALT+F10 (PC) or ALT+FN+F10 (Mac)