Question 1: The Poonamalie Company paid $3,200,000 in cash for all of Slys' outstanding shares. Attorneys' fees related to the combination were $140,000 paid in cash. A comparison of the book and fair values of Slys' assets and liabilities appears below:

	Book Value	Fair Value
Cash and receivables	$96,000	$96,000
Equity method investments	140,000	160,000
Inventory	488,000	320,000
Plant assets	1,280,000	800,000
Current liabilities	(272,000)	(272,000)
Long-term debt	(872,000)	(880,000)
Net assets	$860,000	$224,000

the journal entry made by Poonamalie to record the business combination as amerger.

General Journal
Description	Debit	Credit
Cash and receivables
Equity method investments
Inventory
Plant assets
Answer 9CashGoodwillMerger expensesInvestment in Slys
Merger expenses
Current liabilities
Long-term debt
Answer 18CashGoodwillMerger expensesInvestment in Slys

Question 2: Panda Corporation paid $800,000 in cash for all of Sim Corporation's assets and liabilities in amerger. The following table shows three possible cases for the merger:

	Fair Value
Account	Case 1	Case 2	Case 3
Current assets	$240,000	$320,000	$40,000
Plant assets	480,000	640,000	1,144,000
Identifiable intangible assets	510,000	240,000	160,000
Liabilities	(640,000)	(400,000)	(240,000)
Fair value of identifiable net assets	$590,000	$800,000	$1,104,000

In each of the above cases, prepare the journal entry Panda makes to record the business combination.

Instructions:

• Not all drop-down answers may be required for the journal entry in each case. If an account is not required, select "N/A" as your answer.
• Enter answers using all zeros (do not abbreviate to thousands).

Case 1:

General Journal
Description	Debit	Credit
Current assets
Plant assets
Identifiableintangible assets
Answer 7GoodwillN/ACashGain on acquisition
Liabilities
Cash
Answer 14GoodwillN/ACashGain on acquisition

Case 2:

General Journal
Description	Debit	Credit
Current assets
Plant assets
Identifiableintangible assets
Answer 23GoodwillN/ACashGain on acquisition
Liabilities
Cash
Answer 30GoodwillN/ACashGain on acquisition

Case 3:

General Journal
Description	Debit	Credit
Current assets
Plant assets
Identifiableintangible assets
Answer 39GoodwillN/ACashGain on acquisition
Liabilities
Cash
Answer 46GoodwillN/ACashGain on acquisition

Question 3: Brightcove, Inc. acquires Ciber, Inc. for $25 million in cash and accounts for the acquisition as a merger. Ciber's balance sheet at the date of acquisition is as follows (in thousands):

	Book Value	Fair Value
Current assets	$200	$150
Plant and equipment	6,000	2,000
Licenses and trademarks	2,500	3,500
Total assets	$8,700
Current liabilities	$400	400
Long-term liabilities	5,000	5,500
Capital stock	4,000
Retained earnings	(700)
Total liabilities and equity	$8,700

Brightcove hires a consultant to identify and value any previously unreported intangible assets attributable to Ciber at the date of acquisition. The consultant identifies the following intangibles:

(in thousands)	Fair Value
Customer contracts	$500
Assembled workforce	10,000
Brand names	2,500
Leases at rents below current market	200
Developed technology	750
In-process research and development	150
Future cost savings from elimination of duplicate assets	400
Additional expected revenues from bundling products	300

a. Identify which of the above intangible assets meet the criteria for recognition as identifiable intangibles per ASC Topic 805. Which of the following includes all the assets that meet the criteria?

Customer contracts, Assembled workforce, Brand names, Developed technology, and In-process R&D

Customer contracts, Brand names, Favorable leases, Developed technology, andIn-process R&D

Customer contracts, Brand names, Developed technology,In-process R&D, and Additional expected revenues

Customer contracts, Brand names, Favorable leases, Developed technology,and Future cost savings from duplicate assets

b. Calculate the goodwill to be reported for this acquisition.

Enter the answer in thousands (hint - $25 million equals $25,000 in thousands).

$Answer 2 (in thousands)

c. the journal entry Brightcove makes to record the business combination.

Enter the answer in thousands (hint - $25 million equals $25,000 in thousands).

General Journal
Description	Debit	Credit
Current assets
Plant and equipment
Licenses and trademarks
Customer contracts
Brand names
Answer 13Assembled workforceFuture cost savings from duplicate assetsAdditional expected revenuesFavorable leases
Answer 16Assembled workforceFuture cost savings from duplicate assetsDeveloped technologyAdditional expected revenues
Answer 19Assembled workforceIn-process R&DFuture cost savings from duplicate assetsAdditional expected revenues
Goodwill
Current liabilities
Long term liabilities
Answer 28CashNote payableCapital StockEarnout liability

Question 4: On January 3, 2018, Prance Corporation purchased all of the business operations of Step Corporation for $10 million cash. The acquisition is recorded as a merger. Step's identifiable assets and liabilities are listed below at their fair values:

Current assets	$900,000
Plant and equipment	5,000,000
Estimated liability: defective product lawsuits	(500,000)
Other liabilities	(3,000,000)

The $500,000 estimated liability represented Step's best estimate of likely losses due to lawsuits pending as of January 3, 2018. Later in 2018, as unfavorable information regarding the January 3, 2018 status of defective products became available, the estimated liability was increased to $650,000. Then, in late 2019, after observing that competitors were more frequently winning similar lawsuits, management revised the estimated liability downward to $300,000.

Required

the entries made by Prance to record the original acquisition entry and the subsequent value changes in 2018 and 2019. Original acquisition entry:

General Journal
Description	Debit	Credit
Answer 1Current assets Cash Interest expense investment in swapsEstimated liability-lawsuits
Plant and equipment
Goodwill
Answer 8CashGain on hedgingInterest expenseEstimated liability-lawsuitsCurrent assets
Other liabilities
Cash

Change in preacquisition contingencywithin measurement period:

General Journal
Description	Debit	Credit
Answer 15Estimated liability-lawsuitsCashInterest expenseInvestment in swapsGoodwill
Answer 18CashGain on hedgingInterest expenseGoodwillEstimated liability-lawsuits		expense investment

Change in preacquisition contingency not in measurement period:

General Journal
Description	Debit	Credit
Answer 21Loss on contingent liabilityCashInterest expenseInvestment in swapsEstimated liability-lawsuits
Answer 24CashGain on hedgingInterest expenseGain on estimated liability-lawsuitsLoss on contingent liability

Question 5: On October 1, 2019, Asure Corporation acquires the net assets of BlueBox Inc. in a business combination. Asure's acquisition entry looks like this (amounts in thousands):

General Journal
Description	Debit	Credit
Current assets	18,000
Plant and equipment	60,000
Identiable intangibles	40,000
Goodwill	350,000
Notes payable		150,000
Cash		350,000
Earnings contingency liability		48,000

Brand names and customer lists with a 4-year life comprise the identifiable intangibles. Assume any asset write-offs are current as of the date the new information is discovered.

Required For each of the following independent situations, prepare Asure's journal entry, if any, to record the information.

Instructions:Enter all amounts are in thousands.

a. On February 1, 2020, Asure receives information that the appraiser of BlueBox's plant and equipment was not qualified. A new appraiser values BlueBox's plant and equipment at $42,000 as of the date of acquisition. The plant and equipment has a 5-year life.

General Journal
Description	Debit	Credit
Answer 1Cost of goods soldDepreciation expenseEarnout liabilityGain on earnout (income)Gain on equipment (income)GoodwillInventoryLoss on earnout (income)Loss on equipment (income)Plant & equipmentNo entry
Plant & equipment
Answer 6Cost of goods soldDepreciation expenseEarnout liabilityGain on earnout (income)Gain on equipment (income)GoodwillInventoryLoss on earnout (income)Loss on equipment (income)Plant & equipmentNo entry

b. On March 15, 2020, Asure learns that inventory mistakenly valued at $1,500 at the date of acquisition was really worth $300 at that time. The inventory has been sold.

General Journal
Description	Debit	Credit
Answer 9Cost of goods soldDepreciation expenseEarnout liabilityGain on earnout (income)Gain on equipment (income)GoodwillInventoryLoss on earnout (income)Loss on equipment (income)Plant & equipmentNo entry
Answer 12Cost of goods soldDepreciation expenseEarnout liabilityGain on earnout (income)Gain on equipment (income)GoodwillInventoryLoss on earnout (income)Loss on equipment (income)Plant & equipmentNo entry

c. On June 30, 2020, BlueBox's equipment, acquired by Asure, was damaged in a fire. The amount of damage is $9,000. The equipment has a 5-year life.

General Journal
Description	Debit	Credit
Answer 15Cost of goods soldDepreciation expenseEarnout liabilityGain on earnout (income)Gain on equipment (income)GoodwillInventoryLoss on earnout (income)Loss on equipment (income)Plant & equipmentNo entry
Answer 18Cost of goods soldDepreciation expenseEarnout liabilityGain on earnout (income)Gain on equipment (income)GoodwillInventoryLoss on earnout (income)Loss on equipment (income)Plant & equipmentNo entry

d. On September 22, 2020, Asure determines that because of an increase in demand for BlueBox's products since the date of acquisition, the brand names recorded at the date of acquisition have increased in value by $6,000. In addition, the earnout agreement's fair value has declined by $3,000.

General Journal
Description	Debit	Credit
Answer 21Cost of goods soldDepreciation expenseEarnout liabilityGain on earnout (income)Gain on equipment (income)GoodwillInventoryLoss on earnout (income)Loss on equipment (income)Plant & equipmentNo entry
Answer 24Cost of goods soldDepreciation expenseEarnout liabilityGain on earnout (income)Gain on equipment (income)GoodwillInventoryLoss on earnout (income)Loss on equipment (income)Plant & equipmentNo entry

Question 6: ProLock acquired all of the stock of Senyo for $15,000,000. At the date of acquisition, Senyo's $8,000,000 of reported net assets were fairly stated, except land was overvalued by $500,000 and unrecorded in-process R&D was valued at $1,500,000. Senyo's equity accounts were as follows:

Capital stock	$7,000,000
Retained deficit	(500,000)
Accumulated other comprehensive income	1,800,000
Treasury stock	(300,000)
Total	$8,000,000

Required

the working paper eliminating entries needed to consolidate ProLock and Senyo at the date of acquisition.

Enter numerical answers using all zeros (do not abbreviate to thousands or millions).

Ref.	Description		Debit	Credit
(E)	Capital stock
	Answer 3AOCICashGoodwillLandRetained deficit
	Answer 6AOCICashGoodwillLandRetained deficit
	Treasury stock
	Investment in Senyo
(R)	In-process R&D
	Answer 15AOCICashGoodwillLandRetained deficit
	Answer 18AOCICashGoodwillLandRetained deficit
	Investment in Senyo

Question 7: Pendragon Corporation acquired all of the stock of Sherwood, Inc.for $400 million in cash. Sherwood's shareholders' equity accounts at the date of acquisition were asfollows:

(in millions)
Common stock, par	$5
Additional paid-in capital	15
Retained earnings (deficit)	(40)
Accumulated other comprehensiveloss	(2)
Treasury stock	(3)
Total shareholders' equity (deficit)	$(25)

The following previously unreported assets of Sherwood were reported in the acquisition (in millions):

Customer lists	$65
Brand names	100

Assume Sherwood's fixed assets are overstated by $35 million, but the book values of its other assets and liabilities are fairly reported. (a) Calculate the goodwill for this acquisition. $Answer 1 million (b) Present the working paper eliminating entries necessary to consolidate the balance sheets of Pendragon and Sherwood at the date of acquisition.

Enter answers in millions.

ConsolidationJournal
Description	Debit	Credit
(E)
Common stock
Additional paid-in capital
Answer 6Investment in Sherwood, Inc.Treasury stockGoodwillGain on purchaseEquity in net income of Sherwood, Inc.CashCommon Stock
Retained earnings
Accumulated other comprehensive loss
Answer 13Investment in Sherwood, Inc.Treasury stockGoodwillGain on purchaseEquity in net income of Sherwood, Inc.CashCommon Stock
(R)
Customer lists
Brand names
Answer 20Investment in Sherwood, Inc.Treasury stockGoodwillGain on purchaseEquity in net income of Sherwood, Inc.CashCommon Stock
Fixed assets, net
Answer 25Investment in Sherwood, Inc.Treasury stockGoodwillGain on purchaseEquity in net income of Sherwood, Inc.CashCommon Stock