Financial Accounting > NCLEX > SOLUTION MANUAL FOR ADVANCED ACCOUNTING 6TH EDITION BY JETER (All)

SOLUTION MANUAL FOR ADVANCED ACCOUNTING 6TH EDITION BY JETER

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2.3 EXPLANATION AND ILLUSTRATION OF ACQUISITION ACCOUNTING A. If cash is used, payment equals cost; if debt securities are used, present value of future payments represents cost. B. Assets acquire ... d via issued shares are recorded at fair values of the stock given or the assets received whichever is more clearly evident. C. If stock is actively traded, market price is a better estimate of fair value than appraisal values. D. Goodwill (GW) is recorded as any excess of total cost over the sum of amounts assigned to identifiable assets and liabilities and, under SFAS No. 142 [ASC 350] is no longer amortized. E. Goodwill must be tested for impairment at a level referred to as a reporting unit – generally a level lower than that of the entire entity. If the implied fair value of the reporting unit’s goodwill is less than its carrying amount, goodwill is considered impaired. See Flowchart on the next page. F. Goodwill impairment losses should be aggregated and presented as a separate line item in the operating section of the income statement. G. Bargain acquisition—when the net amount of fair values of identifiable assets less liabilities exceeds the total cost of the acquired company—a gain is recognized in the period of the acquisition under current GAAP. H. When S Company acquires P Company with stock, common stock is credited for the par value of the shares issued, with the remainder credited to other contributed capital. Individual assets acquired and liabilities assumed are recorded at their fair values. Plant assets and other long-lived assets are recorded at their fair values unless a bargain has occurred, in which case their values are reduced below fair value to the extent of the [Show More]

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