Reference no: EM132576955
On January 1, 2009, Boss Co. acquired 40,000 out of the 100,000 outstanding ordinary shares of Digitech Co. for 1,450,000. The acquisition resulted to goodwill of 115,000. Differences in book values and fair values of assets and liabilities of Digitech as of acquisition date are.
Item:
building
carrying amount 1,800,000
Fair Value 2,000,000
remaining useful life 10 years
equipment
Carrying amount 800,000
Fair value 425,000
Remaining useful life 5 years
Lone payable
Carrying amount 1,150,000
Fair value 1,900,000
Rremaining useful life 3 years to maturity
Dduring 2009, Digetech earned profit of 100,000. The amortization of the difference in the fair value and carrying amount of the loans payable is 200,000 and 250,000 in 2009 and 2010 respectively.
requirement:
Question A. How much is the carrying amount of the net assets of Digitech on January 1, 2009?
Question B. How much is the total income (loss) from the investment to in 2009?
Question C. If the recoverable amount of the investment on December 31, 2010 is 1,270,000, what is the entry to recognize the impairment loss?
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