a.
Concept Introduction:
Goodwill that needs to be reported in the financial statement and amount of goodwill impairment to be recognized, if any, if Division K’s fair value is determined to be
b.
Concept Introduction:
Goodwill: It is the excess payment made over and above the fair value of assets acquired by the parent company to the subsidiary company against the assets and liabilities acquired.
Goodwill that needs to be reported in the financial statement and amount of goodwill impairment to be recognized, if Division K’s fair value is determined to be
c.
Concept Introduction:
Goodwill: It is the excess payment made over and above the fair value of assets acquired by the parent company to the subsidiary company against the assets and liabilities acquired.
Goodwill that needs to be reported in the financial statement and amount of goodwill impairment to be recognized, if any, if Division K’s fair value is determined to be
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Advanced Financial Accounting
- Harms acquires Blake on January 1, 2015, for $1,000,000. The amount of $800,000 is assigned to identifiable net assets. Goodwill is being impairment tested on December 31, 2019. There have not been any prior impairment adjustments. The following values apply on that date: Estimated fair value of the Blake operating unit . . . . . . . . . . . $1,200,000 Fair value of net identifiable assets (excluding goodwill) . . . . . 1,120,000 Book value of net identifiable assets (including goodwill) . . . . 1,250,000 The book values include those resulting from assignment of fair value to accounts included in the January 1, 2015, acquisition. Is goodwill impaired? If it is, what is the amount of the impairment adjustment?arrow_forwardOn January 1, 20Y3, The Simmons Group, Inc., purchased the assets of NWS Insurance Co. for $40,610,000, a price reflecting an $4,061,000 goodwill premium. On December 31, 20Y9, The Simmons Group determined that the goodwill from the NWS acquisition was impaired and had a value of only $1,522,875. Determine the book value of the goodwill on December 31, 20Y9, prior to making the impairment adjustment.arrow_forwardDestin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the resulting goodwill to its three reporting units: Sand Dollar, Salty Dog, and Baytowne. Destin opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually. In its current year assessment of goodwill, Destin provides the following individual asset and liability values for each reporting unit: Carrying Amounts Fair Values Sand Dollar Tangible assets $ 242,000 $ 260,000 Trademark 216,000 191,600 Customer list 133,500 143,800 Goodwill 181,500 ? Liabilities (52,500 ) (52,500 ) Salty Dog Tangible assets $ 239,000 $ 239,000 Unpatented technology 249,000 195,750 Licenses 102,500 112,900 Goodwill 199,400 ? Baytowne Tangible assets $ 156,000 $ 174,300 Unpatented technology 0 165,750…arrow_forward
- Determine whether there is any goodwill impairment and if so please calculate the goodwill impairment loss. On the date of acquisition, the following information is available: Fair Value of the reporting unit is $720,000 Fair Value of identifiable net assets $601,000 Goodwill $119,000 One year later at the first periodic review date the following information is available: Fair value of the reporting unit is $788,000 Carrying value of the reporting unit (includes goodwill) $889,000 Fair Value of identifiable net assets $766,000 $22,000arrow_forwardWaters Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $400,000. The Johnson Division’s net assets, including the goodwill, have a carrying amount of $800,000. The fair value of the division is estimated to be $1,000,000. Assume that the fair value of the division is estimated to be $750,000 and the implied goodwill is $350,000. Prepare Waters’ journal entry, if necessary, to record impairment of the goodwill.arrow_forwardCheyenne Corporation purchased Sage Hill Company 3 years ago and at that time recorded goodwill of $320,000. The Sage Hill Division’s net assets, including the goodwill, have a carrying amount of $640,000. The fair value of the division is estimated to be $840,000.Prepare Cheyennes' journal entry, if necessary, to record impairment of the goodwill.arrow_forward
- Accounting Answer asap Group Ccc-Three Ltd has identified its non-current assets consist of three classes: goodwill, land and plant. Details of items included in each class appear below. Goodwill Total goodwill is $580,000 and no impairments have previously been recorded. $300,000 of this total relates to the purchase of Company F on 1 February 2020. The estimated fair value of this goodwill at 30 June 2021 is $350,000. The remaining $280,000 of the total goodwill relates to the purchase of Company G on 1 January 2021. The estimated recoverable amount of this goodwill at 30 June 2021 is $250,000. Land The land was acquired on 1 June 2016 for $2,100,000. The estimated market value of the land at 30 June 2021 is $2,600,000. However, if the land was sold, disposal costs of $90,000 would be incurred. Plant The plant was originally acquired for $270,000 on 1 September 2017. When purchased, the plant was considered to have a nil residual value and a 10-year useful life for both accounting…arrow_forwardOn December 31, an entity had a reporting unit that had a book value of $3,450,000, including goodwill of $225,000. As part of its annual review of goodwill impairment, the entity determined that the fair value of the reporting unit including goodwill was $3,310,000. What is the goodwill impairment loss to be reported on December 31? a. $0 b. $85,000 c. $140,000 d. $225,000arrow_forwardRadio Corporation acquired End of the World Products on January 1, 2022 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2010, the End of the World Products Division had a fair value of $4,400,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $2,700,000 at that time. What amount of loss on impairment of goodwill should Twilight record inarrow_forward
- At year-end, QRS Company reported assets of P5,000,000 and liabilities of P2,000,000. The carrying amounts of the assets approximate fair value, except for land which has a fair value that is P300,000 greater than carrying amount. On same date, RST Company paid P6,000,000 to acquire QRS Company. Determine the amount of goodwill that should be recorded by the acquirer as a result of this purchase. a. 1,000,000 b. 3,300,000 c. 2,700,000 d. 3,000,000arrow_forwardDestin Company recently acquired several businesses and recognized goodwill in each acquisition. Destin has allocated the resulting goodwill to its three reporting units: Sand Dollar, Salty Dog, and Baytowne. Destin opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually.In its current year assessment of goodwill, Destin provides the following individual asset and liability values for each reporting unit:The fair values for each reporting unit (including goodwill) are $510,000 for Sand Dollar, $580,000 for Salty Dog, and $560,000 for Baytowne. To date, Destin has reported no goodwill impairments.a. How much goodwill impairment should Destin report this year?b. What changes to the valuations of Destin’s tangible assets and identified intangible assets should be reported based on the goodwill impairment tests?arrow_forwardPelota Company recently acquired several businesses and recognized goodwill in each acquisition. Pelota allocated the resulting goodwill to its three reporting units: R-one, R-two, and R-three. Pelota opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually. In its current-year assessment of goodwill, Pelota provides the following individual asset and liability carrying amounts for each of its reporting units: Items Carrying Amounts R-one R-two R-three Tangible assets $241,000 $219,000 $159,000 Trademark 199,000 - - Computer software 148,500 - - Unpatented technology - 232,000 - Licenses - 97,500 - Copyrights - - 57,250 Goodwill 150,200 202,850 118,000 Liabilities (32,250) - - The total fair values for each reporting unit (including goodwill) are $682,350 for R-one, $709,300 for R-two, and $653,650 for R-three. To date, Pelota has reported no goodwill impairments. Required: How much goodwill impairment…arrow_forward
- Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningIntermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning