Plattsburgh Company acquired all of Sedona Corporation's assets and liabilities for $40 million in cash. At the date of acquisition, Sedona's identifiable net assets had a fair value of $10 million.
Required
For each of the following value changes occurring six months subsequent to the acquisition, prepare the journal entry, if any, to record the revaluation. Treat each change independently.
a. It was determined that brand names valued at $1 million at the date of acquisition, and capitalized per ASC Topic 805 requirements, actually had a value of $5 million at the date of acquisition.
b. A downturn in the economy subsequent to the acquisition resulted in a $2 million decline in the value of acquired developed technology, capitalized at the date of acquisition per ASC Topic 805 requirements.
c. Land valued at $6 million at the date of acquisition increased in value to $8 million due to an increased demand for real estate in the last six months.
d. The acquisition included an earnout provision, valued at $3 million at the date of acquisition. Due to an upturn in demand for Sedona's products in the last six months, the expected present value of the earnout is now $5 million.
e. The acquisition included an earnout provision, valued at $3 million at the date of acquisition. New information is obtained about Sedona's expected future performance as of the date of acquisition, increasing its expected present value to $4 million at the date of acquisition.
f. It is determined that Sedona's acquisition-date liabilities omitted a pending lawsuit valued at $1.5 million.
g. Sedona's acquired liabilities, reported by Plattsburgh, include a pending lawsuit with a date-of-acquisition estimated value of $10 million. Because of events occurring subsequent to the acquisition, it is determined that the lawsuit's value has declined to $2 million.
h. Sedona's acquired assets include AFS debt investments with a date-of-acquisition value of $2 million. These investments increase in value to $2.5 million due to a decline in market interest rates subsequent to acquisition.
i. Sedona's acquired assets include AFS debt investments with a date-of-acquisition value of $2 million. It is determined that some AFS debt investments were omitted from the inventory of acquired investments. The value of these omitted investments was $1.5 million.

Question

Plattsburgh Company acquired all of Sedona Corporation's assets and liabilities for $40 million in cash. At the date of acquisition, Sedona's identifiable net assets had a fair value of $10 million.
Required
For each of the following value changes occurring six months subsequent to the acquisition, prepare the journal entry, if any, to record the revaluation. Treat each change independently.
a. It was determined that brand names valued at $1 million at the date of acquisition, and capitalized per ASC Topic 805 requirements, actually had a value of $5 million at the date of acquisition.
b. A downturn in the economy subsequent to the acquisition resulted in a $2 million decline in the value of acquired developed technology, capitalized at the date of acquisition per ASC Topic 805 requirements.
c. Land valued at $6 million at the date of acquisition increased in value to $8 million due to an increased demand for real estate in the last six months.
d. The acquisition included an earnout provision, valued at $3 million at the date of acquisition. Due to an upturn in demand for Sedona's products in the last six months, the expected present value of the earnout is now $5 million.
e. The acquisition included an earnout provision, valued at $3 million at the date of acquisition. New information is obtained about Sedona's expected future performance as of the date of acquisition, increasing its expected present value to $4 million at the date of acquisition.
f. It is determined that Sedona's acquisition-date liabilities omitted a pending lawsuit valued at $1.5 million.
g. Sedona's acquired liabilities, reported by Plattsburgh, include a pending lawsuit with a date-of-acquisition estimated value of $10 million. Because of events occurring subsequent to the acquisition, it is determined that the lawsuit's value has declined to $2 million.
h. Sedona's acquired assets include AFS debt investments with a date-of-acquisition value of $2 million. These investments increase in value to $2.5 million due to a decline in market interest rates subsequent to acquisition. 
i. Sedona's acquired assets include AFS debt investments with a date-of-acquisition value of $2 million. It is determined that some AFS debt investments were omitted from the inventory of acquired investments. The value of these omitted investments was $1.5 million.

Quizplus · Accepted Answer

The Answer of Plattsburgh Company acquired all of Sedona Corporation's assets and liabilities for $40 million in cash. At the date of acquisition, Sedona's identifiable net assets had a fair value of $10 million.
Required
For each of the following value changes occurring six months subsequent to the acquisition, prepare the journal entry, if any, to record the revaluation. Treat each change independently.
a. It was determined that brand names valued at $1 million at the date of acquisition, and capitalized per ASC Topic 805 requirements, actually had a value of $5 million at the date of acquisition.
b. A downturn in the economy subsequent to the acquisition resulted in a $2 million decline in the value of acquired developed technology, capitalized at the date of acquisition per ASC Topic 805 requirements.
c. Land valued at $6 million at the date of acquisition increased in value to $8 million due to an increased demand for real estate in the last six months.
d. The acquisition included an earnout provision, valued at $3 million at the date of acquisition. Due to an upturn in demand for Sedona's products in the last six months, the expected present value of the earnout is now $5 million.
e. The acquisition included an earnout provision, valued at $3 million at the date of acquisition. New information is obtained about Sedona's expected future performance as of the date of acquisition, increasing its expected present value to $4 million at the date of acquisition.
f. It is determined that Sedona's acquisition-date liabilities omitted a pending lawsuit valued at $1.5 million.
g. Sedona's acquired liabilities, reported by Plattsburgh, include a pending lawsuit with a date-of-acquisition estimated value of $10 million. Because of events occurring subsequent to the acquisition, it is determined that the lawsuit's value has declined to $2 million.
h. Sedona's acquired assets include AFS debt investments with a date-of-acquisition value of $2 million. These investments increase in value to $2.5 million due to a decline in market interest rates subsequent to acquisition. 
i. Sedona's acquired assets include AFS debt investments with a date-of-acquisition value of $2 million. It is determined that some AFS debt investments were omitted from the inventory of acquired investments. The value of these omitted investments was $1.5 million.

Plattsburgh Company Acquired All of Sedona Corporation's Assets and Liabilities