On May 31, 2019, PDO Co. paid OMR 3,400,000 to acquire all of the ordinary shares of 0OC Corporation, which became a division of PDO. 0OC reported the following statement of financial position at the time of the acquisition: Non-current assets OMR 2,700,000, Current assets 900,000, Total assets 3,600,000, Equity 2,500,000, Non-current liabilities 500,000, Current liabilities 600,000, and Total equity and liabilities 3,600,000. It was determined at the date of the purchase that the fair value of the identifiable net assets of 0OC was OMR 2,800,000. At December 31, 2019, 00C reports the following statement of financial position information: Current assets OMR 800,000 Non-current assets (including goodwill recognized in purchase) 2,400,000 Curent liabilities (700,000) Non-current liabilities (500,000) OMR 2,000,000 Net assets It is determined that the recoverable amount value of the 0OC division is OMR 2,100,000. Instructions (show computations) (a) Compute the amount of goodwill recognized, if any, on May 31, 2019. (b) Determine the impairment loss, if any, to be recorded on December 31, 2019. (c) Assume that the recoverable amount of the 0OC division is OMR 1,800,000 instead of OMR 2,100,000. Prepare the journal entry to record the impairment loss, if any, on December
On May 31, 2019, PDO Co. paid OMR 3,400,000 to acquire all of the ordinary shares of 0OC Corporation, which became a division of PDO. 0OC reported the following statement of financial position at the time of the acquisition: Non-current assets OMR 2,700,000, Current assets 900,000, Total assets 3,600,000, Equity 2,500,000, Non-current liabilities 500,000, Current liabilities 600,000, and Total equity and liabilities 3,600,000. It was determined at the date of the purchase that the fair value of the identifiable net assets of 0OC was OMR 2,800,000. At December 31, 2019, 00C reports the following statement of financial position information: Current assets OMR 800,000 Non-current assets (including goodwill recognized in purchase) 2,400,000 Curent liabilities (700,000) Non-current liabilities (500,000) OMR 2,000,000 Net assets It is determined that the recoverable amount value of the 0OC division is OMR 2,100,000. Instructions (show computations) (a) Compute the amount of goodwill recognized, if any, on May 31, 2019. (b) Determine the impairment loss, if any, to be recorded on December 31, 2019. (c) Assume that the recoverable amount of the 0OC division is OMR 1,800,000 instead of OMR 2,100,000. Prepare the journal entry to record the impairment loss, if any, on December
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
ChapterA2: Investments
Section: Chapter Questions
Problem 26E
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