1.On June 1,2019,Fox Company purchased Wolf Corporation for $26,000,000 cash.At the time of the purchase,the market value of Wolf Corporation's assets and liabilities were $30,000,000 and $5,000,000,respectively.The book value of Wolf Corporation's assets and liabilities were $10,000,000 and $6,000,000,respectively.Record the journal entry for the acquisition by Fox Company.
2.By December 31,2019,Fox Company discovered that the goodwill associated with Wolf Corporation is impaired and is worthless.Wolf Corporation is on the brink of bankruptcy.Record the journal entry needed by Fox Company.
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Definitions:
Demand Increases
A situation where the quantity of a product or service desired by buyers exceeds the quantity supplied at a particular price.
Supply Decreases
A condition in the market where the quantity of a product or service available for sale declines, which can lead to higher prices.
Quantity Supplied
is the amount of a good or service that producers are willing and able to sell at a given price over a specified period of time.
Supply Increased
A situation in which the quantity of a good or service that producers are willing and able to offer for sale rises, possibly leading to lower prices.
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