Question 2 On July 31, 2017, Sheridan Company paid $2,850,000 to acquire all of the common stock of Conchita Incorporated, which became a division of Sheridan. Conchita reported the following balance sheet at the time of the acquisition. $550,000 450,000 2,270,000 $3,270,000 Current assets $720,000 Current liabilities 2,550,000 Long-term liabilities $3,270,000 Stockholders' equity Noncurrent assets Total assets Total liabilities and stockholders' equity It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,625,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2017, Conchita reports the following balance sheet information. $410,000 2,510,000 (600,000) (400,000) $1,920,000 Current assets Noncurrent assets (including goodwill recognized in purchase) Current liabilities Long-term liabilities Net assets It is determined that the fair value of the Conchita Division is $1,960,000. The recorded amount for Conchita's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value $100,000 above the carrying value. Assume that fair value of the Conchita Division is $1,861,000 instead of $1,960,000. Determine the impairment loss, if any, to be recorded on December 31, 2017. (Enter negative amounts using either a negative sign preceding the number e.g. -45 or parentheses e.g. (45).) The impairment loss SHOW LIST OF ACCOUNTS LINK TO TEXT LINK TO TEXT Prepare the journal entry to record the impairment loss, if any, and indicate where the loss would be reported in the income statement. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.) Account Titles and Explanation Debit Credit This loss will be reported in income as a separate line item before the subtotal