Question

Francisco Inc. acquired 100 percent of the voting shares of Beltran Company on January 1, 2017. In exchange, Francisco paid $467,500 in cash and issued 109,000 shares of its own $1 par value common stock. On this date, Francisco’s stock had a fair value of $12 per share. The combination is a statutory merger with Beltran subsequently dissolved as a legal corporation. Beltran’s assets and liabilities are assigned to a new reporting unit.

The following reports the fair values for the Beltran reporting unit for January 1, 2017, and December 31, 2018, along with their respective book values on December 31, 2018.

Beltran Reporting Unit	Fair Values 1/1/17			Fair Values 12/31/18			Book Values 12/31/18
Cash	$	96,500		$	66,500		$	66,500
Receivables		182,000			237,000			237,000
Inventory		260,000			306,000			294,000
Patents		606,000			716,000			561,500
Customer relationships		548,500			510,000			462,250
Equipment (net)		385,500			312,000			303,000
Goodwill		?			?			448,000
Accounts payable		(176,000	)		(261,000	)		(261,000	)
Long-term liabilities		(575,000	)		(478,000	)		(478,000	)

1. Prepare Francisco’s journal entry to record the assets acquired and the liabilities assumed in the Beltran merger on January 1, 2017.
2. On December 31, 2018, Francisco opts to forgo any goodwill impairment qualitative assessment and estimates that the total fair value of the entire Beltran reporting unit is $1,542,750. What amount of goodwill impairment, if any, should Francisco recognize on its 2018 income statement?

Answer 1

van 1, 2017 morgen om assumed Answer Page No o @ Ferancisco's journal entry to record the cascato acquired and the liabilities assumed the Belton mengenal com 2017 Particular Debit Credit Cash $96500 Receivable $ 182000 Inventory $ 260,000 Patents $606000 Cristomer relationships $548500 Equipment (net) $ 385500 - $448000 To accounts payable $146000 To long term liabilities $575000 To cash $ 467500 To common fock (face value) $ 109000 To additional paid in capital $1199000 Clo9000 x 02-1) Consideration transferred - cash paid + fair value of shares issued : = 467500 + ( 109000 x $12) 1445500 Goodwill 109000 x $0

Page. No @ fair value of net assets acquired = 96500 + 182000 + 260,000 + 606000 +548500 + 385500 – 186000 – 575000 = $1327500 Goodwill = 1775500 -1327500 - $448000 Goodlucilloscopacocot logo fair value of reporting unit' - $ 154 2 450 fain value of reporting units net assets. 2018 = 66500 + 237000 + 306000 + 416000 + 510000 +312000 - 261000 – 448000 = $ 1408500 Impaired fainvalue of good will = 1542950 – 1408500 ... = $ 134250 Book value of Goodwill = $448000.. Goodwill impairment lors = 134850 - 448000 = ($3/3750) deli Goodwill impairment lors = ($313450)