Question

16) Joe, Inc. purchased a competitor in 2010 for $950,000. The results of an appraisal of the value of the assets and liabilities of the competitor is below: Fair Value ($) Cash 100,000 Accounts Receivable 200,000 Inventory 1,000,000 Property, Plant and Equipment 1,500,000 Accounts Payable 810,000 Notes Payable 1,200,000 Prepare the journal entry to record the acquisition? 17) Related to (16) above, an internal analysis of Joe, Inc. performed on December 31, 2012 indicated that the fair value of the company was $5,000,000, including goodwill that was recorded for an acquisition of a competitor in 2010. The internal analysis also indicated that the fair value of Joe, Inc.’s assets and liabilities (other than goodwill) on December 31, 2012 were: Fair Value ($) Cash 400,000 Accounts Receivable 550,000 Inventory 3,500,000 Property, Plant and Equipment 4,950,000 Accounts Payable 1,600,000 Notes Payable 2,900,000 Prepare any necessary journal entry related to the above information.

17) Related to (16) above, an internal analysis of Joe, Inc. performed on December 31, 2012 indicated that the fair value of the company was $5,000,000, including goodwill that was recorded for an acquisition of a competitor in 2010. The internal analysis also indicated that the fair value of Joe, Inc.’s assets and liabilities (other than goodwill) on December 31, 2012 were: Fair Value ($) Cash 400,000 Accounts Receivable 550,000 Inventory 3,500,000 Property, Plant and Equipment 4,950,000 Accounts Payable 1,600,000 Notes Payable 2,900,000 Prepare any necessary journal entry related to the above information.

I NEED THE ANSWER FOR 17! SHOW ME STEP BY STEP PLEASE!

THE ANSWER IS  Loss on Impairment 60,000 Goodwill 60,000

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Answer 1

16	Jornal Entry in the book of Joe Inc				17	Jornal Entry in the book of Joe Inc
1. Journal Entries- Part I					1. Journal Entries- Part II-Revaluation of Assets & liabilities
Sn.	Particular	Dr	Cr		Sn.	Particular	Dr	Cr
1	Cash A/c Dr	1,00,000				31-12-2013
	Account Receivable Dr	2,00,000			1	Cash A/c Dr	4,00,000
	Inventory Dr	10,00,000				Account Receivable Dr	5,50,000
	Property, Plant and Equipment Dr	15,00,000				Inventory Dr	35,00,000
	Goodwill (bf)	1,60,000				Property, Plant and Equipment Dr	49,50,000
	To Account Payable		8,10,000			Goodwill	1,60,000
	To Notes Payable		12,00,000			To Account Payable		16,00,000
	To Purchase Consideration Payable		9,50,000			To Notes Payable		29,00,000
	( Being Acquisition of competitor has been recorded)					To Net Assets		50,60,000
						( Being Fair value gain on revaluation of net asesets recorded)
		29,60,000	29,60,000	-			95,60,000	95,60,000
					2	Calculation of Impairment Loss
						a. Value of Net Assets	50,60,000
						b. Fair Value of Company	50,00,000
						Impairment loss(a-b)	60,000
	Note- Value of Goodwill should be 1,60,000 instead of 60,000.