Chapter 3
Long-Term Assets
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AP-13B (
6
)
On January 1, 2016, Singleton Corporation purchased the assets and liabilities of Twinning’s
Inc. for a total purchase price of $215,800. Singleton paid a premium for the purchase,
because Twinning’s products are a recognizable brand name in the market. Twinning’s had
assets of $847,000 and liabilities of $674,900.
Required
a) Prepare the journal entry for Singleton to record the purchase.
Date
Account Title and Explanation
Debit
Credit
b) Due to an increase in the number of competitors in the market, on December 31, 2016
Singleton reviewed all assets for any impairment. It was discovered that the goodwill had
a fair market value of only $36,500. Record the journal entry to record this impairment to
goodwill.
Date
Account Title and Explanation
Debit
Credit
