Use the following information to answer bellow Questions:
On January 1, 2018, Pearson Company acquired all of Sundisk Company's voting stock for $20,000 in cash. Sundisk's total shareholders' equity at January 1, 2018 was $5,000. Some of Sundisk's assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
$\begin{array}{lrr}
&\text { Book Value}&\text { Fair Value }\
\text { Plant assets, net (10 years, straight-line) } & \$ 15,000 & \$ 10,000 \
\text { Identifiable intangibles (indefinite life) } & 0 & 9,000
\end{array}$
It is now December 31, 2020 (3 years later). Impairment of recognized identifiable intangibles totals $400 for 2018 and 2019, and there is no impairment in 2020. There is no goodwill impairment as of the beginning of 2020, but goodwill impairment for 2020 is $1,200. Pearson uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pearson and Sundisk follow:
$\begin{array}{|l|r|r|}
\hline&\text { Pearson } & \text { Sund isk } \
&\operatorname{Dr}(\mathrm{Cr}) & \operatorname{Dr}(\mathrm{Cr})\
\hline \text { Current assets } & \$ 5,000 & \$ 2,500 \
\hline \text { Plant assets, net } & 28,700 & 22,000 \
\hline \text { Identifiable intangibles } & - & - \
\hline \text { Investment in Sundisk } & 28,400 & - \
\hline \text { Goodwill } & - & - \
\hline\text { Liabilities } & \{20,300\} & \{11,000\} \
\hline \text { Capital stock } & \{15,000\} & \{2,000\} \
\hline \text { Retained earnings, beginning } & \{25,000\} & \{10,000\} \
\hline \text { Sales revenue } & \{25,000\} & \{14,000\} \
\hline \text { Equity in net income of Sundisk } & \{800\} & -\
\hline \text { Cost of goods sold } & 20,000 & 9,000 \
\hline \text { Operating expenses } & 4,000 & 3,500 \
\hline&\$0&\$0\
\hline
\end{array}$ The following questions relate to consolidation eliminating entries for 2020.
-Eliminating entry (R) debits goodwill in the amount of:

Question

Use the following information to answer bellow Questions:
On January 1, 2018, Pearson Company acquired all of Sundisk Company's voting stock for $20,000 in cash. Sundisk's total shareholders' equity at January 1, 2018 was $5,000. Some of Sundisk's assets and liabilities at the date of acquisition had fair values that were different from reported values, as follows:
 $\begin{array}{lrr}
&\text { Book Value}&\text { Fair Value }\
\text { Plant assets, net (10 years, straight-line) } & \$ 15,000 & \$ 10,000 \
\text { Identifiable intangibles (indefinite life) } & 0 & 9,000
\end{array}$
 It is now December 31, 2020 (3 years later). Impairment of recognized identifiable intangibles totals $400 for 2018 and 2019, and there is no impairment in 2020. There is no goodwill impairment as of the beginning of 2020, but goodwill impairment for 2020 is $1,200. Pearson uses the complete equity method to account for its investment. December 31, 2020 trial balances for Pearson and Sundisk follow:
 $\begin{array}{|l|r|r|}
\hline&\text { Pearson } & \text { Sund isk } \
&\operatorname{Dr}(\mathrm{Cr}) & \operatorname{Dr}(\mathrm{Cr})\
\hline \text { Current assets } & \$ 5,000 & \$ 2,500 \
\hline \text { Plant assets, net } & 28,700 & 22,000 \
\hline \text { Identifiable intangibles } & - & - \
\hline \text { Investment in Sundisk } & 28,400 & - \
\hline \text { Goodwill } & - & - \
\hline\text { Liabilities } & \{20,300\} & \{11,000\} \
\hline \text { Capital stock } & \{15,000\} & \{2,000\} \
\hline \text { Retained earnings, beginning } & \{25,000\} & \{10,000\} \
\hline \text { Sales revenue } & \{25,000\} & \{14,000\} \
\hline \text { Equity in net income of Sundisk } & \{800\} & -\
\hline \text { Cost of goods sold } & 20,000 & 9,000 \
\hline \text { Operating expenses } & 4,000 & 3,500 \
\hline&\$0&\$0\
\hline
\end{array}$ The following questions relate to consolidation eliminating entries for 2020.
-Eliminating entry (R) debits goodwill in the amount of:

Quizplus · Accepted Answer

The goodwill impairment of $1,200 reported for 2020 needs to be adjusted against the goodwill account in the consolidation process. Since the impairment reduces the value of goodwill, the eliminating entry would debit goodwill to decrease its value on the consolidated financial statements. However, the question specifically asks for the amount to debit goodwill, which is not directly related to the impairment amount but rather the initial calculation of goodwill at acquisition. The initial goodwill calculation is not provided in the question, but the correct choice among the options given is based on the information available and the typical process of calculating and adjusting goodwill in consolidation, which involves assessing the difference between the acquisition cost and the fair value of net assets acquired. The choice provided might be a misunderstanding of the question's requirement, as it seems to ask for the goodwill impairment amount, but the correct answer choice (B) $11,000 is not directly derivable from the given information. The explanation provided is based on general accounting principles for goodwill impairment in consolidation, but the specific answer choice might not accurately reflect the correct process for this scenario due to a lack of direct calculation details for goodwill.

Use the Following Information to Answer Bellow Questions: on January

Use the Following Information to Answer Bellow Questions:
on January