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  3. on july 1, 2021, kroger inc. acquired hole foods f

On July 1, 2021, Kroger Inc. acquired Hole Foods for $500M cash and a $250M...

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Accounting

On July 1, 2021, Kroger Inc. acquired Hole Foods for $500M cash and a $250M Note payable to the Bank of New York. The balance sheet on that date for Hole Foods is as follows:

Hole Foods

Balance Sheet

July 1, 2021

(in thousands)

Cash

$50,000

Accounts Payable

$200,000

Accounts Receivable

90,000

Stockholders Equity

235,000

Inventory

100,000

Land

40,000

Buildings (net)

75,000

Equipment (net)

70,000

Trademarks

10,000

______

Totals

$435,000

$435,000

The recorded amounts (book values) all approximate fair value except for Land (Fair Value is $80M) Inventory (Fair Value is $150M and Trademarks (Fair Value $50M).

Instructions: Answer the following questions for Krogers acquisition of Hole Foods.

  1. Determine the amount of Goodwill, if any, that Kroger should recognize.
  2. On December 31, 2021, the Fair Value of Krogers Goodwill is estimated to be $300M. Under GAAP, is Kroger required to record any adjusting entries or disclosures. If so, explain.

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