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During 2016, Lexie, Inc

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During 2016, Lexie, Inc.acquired Lena, Inc.for $10,000,000.The fair market value of the net assets of Lena, Inc.was $8,500,000 on the date of purchase.During 2019, Lexie, Inc.determined the goodwill resulting from the Lena acquisition was impaired and had a value of $1,000,000.
(a)Determine the amount of goodwill implied during 2016.
(b)Illustrate the effects on the accounts and the financial statements of the December 31, 2019, adjustment for the goodwill impairment.


Definitions:

Produced Units

The quantity of items manufactured during a specific period.

Direct Manufacturing Cost

Direct manufacturing cost encompasses all expenditures directly tied to the production of goods, including materials and labor but excluding overhead costs.

Produced Units

The quantity of units of a product made during a specific period.

Incremental Manufacturing Cost

The additional cost incurred to produce one more unit of a product.

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