Advanced Financial Accounting 12th Edition by Theodore Christensen solution manual
5. c – $15,000. The carrying value of the reporting unit’s net assets ($575,000) exceeds the estimated fair value of the reporting unit ($560,000). The goodwill should be impaired by the amount by which the carrying value of the unit’s net assets exceeds the estimated fair value of the reporting unit, $15,000 ($575,000 - $560,000).
E1-5 Asset Transfer to Subsidiary
a. Journal entry recorded by Pale Company for transfer of assets to Sight Company:
Investment in Sight Company Common Stock
408,000
Accumulated Depreciation – Buildings
24,000
Accumulated Depreciation – Equipment
36,000
Cash
21,000
Inventory
37,000
Land
80,000
Buildings
240,000
Equipment
90,000
b. Journal entry recorded by Sight Company for receipt of assets from Pale Company:
Cash
21,000
Inventory
37,000
Land
80,000
Buildings
240,000
Equipment
90,000
Accumulated Depreciation – Buildings
24,000
Accumulated Depreciation – Equipment
36,000
Common Stock
60,000
Additional Paid-In Capital
348,000
E1-6 Creation of New Subsidiary
a. Journal entry recorded by Pester Company for transfer of assets to Shumby Corporation:
Investment in Shumby Corporation Common Stock
498,000
Allowance for Uncollectible Accounts Receivable
7,000
Accumulated Depreciation – Buildings
35,000
Accumulated Depreciation – Equipment
60,000
Cash
40,000
Accounts Receivable
75,000
Inventory
50,000
Land
35,000
Buildings
160,000
Equipment
240,000
b. Journal entry recorded by Shumby Corporation for receipt of assets from Pester Company:
Cash
40,000
Accounts Receivable
75,000
Inventory
50,000
Land
35,000
Buildings
160,000
Equipment
240,000
Allowance for Uncollectible
Accounts Receivable
7,000
Accumulated Depreciation – Buildings
35,000
Accumulated Depreciation – Equipment
60,000
Common Stock
120,000
Additional Paid-In Capital
378,000
E1-7 Balance Sheet Totals of Parent Company
a. Journal entry recorded by Phoster Corporation for transfer of assets and accounts payable to Skine Company:
Investment in Skine Company Common Stock
66,000
Accumulated Depreciation
28,000
Accounts Payable
22,000
Cash
15,000
Accounts Receivable
24,000
Inventory
9,000
Land
3,000
Depreciable Assets
65,000