Advanced Financial Accounting
11th Edition
ISBN: 9780078025877
Author: Theodore E. Christensen, David M Cottrell, Cassy JH Budd Advanced Financial Accounting
Publisher: McGraw-Hill Education
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Question
Chapter 1, Problem 1.33P
a.
To determine
To calculate: The value of
Introduction: Goodwill is an intangible asset that specifies the market value of the company. It includes the company’s brand value, customer base and relation, and relationship with employees. It is not separately defined and has a contractual or legal right on the company.
b.
To determine
To calculate: The value of impairment of goodwill for the current period.
Introduction: Goodwill is an intangible asset that specifies the market value of the company. It includes the company’s brand value, customer base and relation, and relationship with employees. It is not separately defined and has a contractual or legal right on the company.
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Choose the correct.Goodwill recognized in a business combination must be allocated among a firm’s identified reporting units. If the fair value of a particular reporting unit with recognized goodwill falls below its carrying amount, which of the following is true?a. No goodwill impairment loss is recognized unless the implied value for goodwill exceeds its carrying amount.b. A goodwill impairment loss is recognized if the carrying amount for goodwill exceeds its implied value.c. A goodwill impairment loss is recognized for the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill.d. The reporting unit reduces the values assigned to its long-term assets (including any unrecognized intangibles) to reflect its fair value.
Which of the following statements is true regarding goodwill?
a.Goodwill is amortized based on the lesser of the useful life or the legal life.
b.Goodwill is the exclusive use of a name, term, or symbol used to identify a business or its product.
c.If the purchase price of a business exceeds the fair value of its net assets, the excess is recorded as goodwill.
d.Goodwill is amortized based on a 10-year period.
Goodwill recognized in a business combination must be allocated among a firm’s identified reporting units. If the fair value of a particular reporting unit with recognized goodwill falls below its carrying amount, which of the following is true?
No goodwill impairment loss is recognized unless the implied value for goodwill exceeds its carrying amount.
A goodwill impairment loss is recognized if the carrying amount for goodwill exceeds its implied value.
A goodwill impairment loss is recognized for the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill.
The reporting unit reduces the values assigned to its long-term assets (including any unrecognized intangibles) to reflect its fair value
Chapter 1 Solutions
Advanced Financial Accounting
Ch. 1 - What types of circumstances would encourage...Ch. 1 - How would the decision to dispose of a segment of...Ch. 1 - Prob. 1.3QCh. 1 - Prob. 1.4QCh. 1 - Prob. 1.5QCh. 1 - Prob. 1.6QCh. 1 - Prob. 1.8QCh. 1 - Prob. 1.9QCh. 1 - Prob. 1.10QCh. 1 - Prob. 1.11Q
Ch. 1 - Prob. 1.12QCh. 1 - Prob. 1.13QCh. 1 - Prob. 1.14QCh. 1 - Prob. 1.15QCh. 1 - Within the measurement period following a business...Ch. 1 - Prob. 1.17QCh. 1 - Prob. 1.1CCh. 1 - Prob. 1.3CCh. 1 - Prob. 1.4CCh. 1 - Risks Associated with Acquisitions Not all...Ch. 1 - Prob. 1.8CCh. 1 - Prob. 1.1.1ECh. 1 - Prob. 1.1.2ECh. 1 - Prob. 1.1.3ECh. 1 - Multiple-Choice Questions on Complex Organizations...Ch. 1 - Prob. 1.1.5ECh. 1 - Prob. 1.2.1ECh. 1 - Prob. 1.2.2ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Prob. 1.2.4ECh. 1 - Multiple-Choice Questions on Recording Business...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Multiple-Choice Questions on Reported Balances...Ch. 1 - Prob. 1.3.3ECh. 1 - Prob. 1.3.4ECh. 1 - Prob. 1.4.1ECh. 1 - Prob. 1.4.2ECh. 1 - Prob. 1.4.3ECh. 1 - Prob. 1.4.4ECh. 1 - Prob. 1.4.5ECh. 1 - Prob. 1.5ECh. 1 - Prob. 1.6ECh. 1 - Prob. 1.7ECh. 1 - Prob. 1.8ECh. 1 - Prob. 1.9ECh. 1 - Prob. 1.10ECh. 1 - Prob. 1.11ECh. 1 - Goodwill Recognition Spur Corporation reported the...Ch. 1 - Acquisition Using Debentures Planter Corporation...Ch. 1 - Bargain Purchase Using the data resented in E1-13,...Ch. 1 - Prob. 1.15ECh. 1 - Prob. 1.16ECh. 1 - Prob. 1.17ECh. 1 - Prob. 1.18ECh. 1 - Prob. 1.19ECh. 1 - Prob. 1.20ECh. 1 - Prob. 1.21ECh. 1 - Prob. 1.22ECh. 1 - Prob. 1.23ECh. 1 - Prob. 1.24PCh. 1 - Prob. 1.25PCh. 1 - Prob. 1.26PCh. 1 - Prob. 1.27PCh. 1 - Prob. 1.28PCh. 1 - Prob. 1.29PCh. 1 - Prob. 1.30PCh. 1 - Prob. 1.31PCh. 1 - Prob. 1.32PCh. 1 - Prob. 1.33PCh. 1 - Prob. 1.34PCh. 1 - Prob. 1.35PCh. 1 - Business Combination Following are the balance...Ch. 1 - Prob. 1.37PCh. 1 - Prob. 1.38PCh. 1 - Prob. 1.39PCh. 1 - Prob. 1.40P
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- During the measurement period, which of the following may affect the amount of goodwill from business combination? New information regarding estimates in the contingent consideration that are not existing at the date of acquisition Nothing can affect the amount of goodwill. New information regarding estimates in the contingent consideration that are existing at the date of acquisition. New information regarding estimates in the contingent considerationarrow_forwardEntity A obtained control of Entity B in a business combination. When computing for goodwill, Entity A would least likely account for which of the following? A. Entity B’s research and development projects that were already charged as expenses, but have a fair value as at the acquisition date. B. Entity B’s unrecorded identifiable intangible assets C. Operating lease between Entity A and Entity B, wherein Entity B is the lessee. D. Entity A’s expected costs of exiting or terminating some or all of Entity B’s activities after the combination.arrow_forwardLevi and Peter's Athletic Emporium (LPAE) provided the following information. Fair value of the reporting unit, including goodwill $500 Fair value of the net assets, excluding goodwill $400 Book value of net assets, excluding goodwill $600 Add: Book value of goodwill 300 Book value of the reporting unit, including goodwill $900 Note that LPAE performs the quantitative test on at least an annual basis. The qualitative assessment of goodwill reveals that it is more likely than not that the goodwill is impaired. Is there a goodwill impairment loss? Prepare any required journal entries.Requirements: Conduct the impairment test for goodwill at the end of the year.Record any impairment loss on the goodwillarrow_forward
- 10. During the measurement period, which of the following may affect the amount of goodwill from business combination? Group of answer choices New information regarding estimates in the contingent consideration that are existing at the date of acquisition. New information regarding estimates in the contingent consideration that are not existing at the date of acquisition Nothing can affect the amount of goodwill. New information regarding estimates in the contingent considerationarrow_forwardIndicate whether each of the following statements is true or false. Goodwill can only arise from a third-party purchase of another company’s net assets. Under IFRS, indefinite-life intangibles are treated the same way as definite-life intangibles regarding impairment evaluation but not measurement. Under IFRS, goodwill impairment reversals are not allowed unless the goodwill is internally developed.arrow_forwardThe cost of intangible asset acquired in business combination is recognized by entity in its book at: a. Cost of acquisition date b. Either at cost or fair value at acquisition date c. Fair value at acquisition date d. Fair value at end of the reporting periodarrow_forward
- Simon Company determines that its goodwill is impaired. It finds that the book value of its reporting unit is $1,490,000, including recorded goodwill of $400,000. The fair value of the identifiable assets of the reporting unit is $1,450,000. What is the amount of goodwill impaired?arrow_forwardAn impairment loss for goodwill is calculated as the difference between ________. Group of answer choices the fair value of the reporting unit (including goodwill) and the book value of the reporting unit (including goodwill) the implied fair value of goodwill and its book value the fair value of the reporting unit (including goodwill) and the fair value of its net assets (without goodwill) the book value of the reporting unit (including goodwill) and the book value of its net assets (without goodwill)arrow_forwardChoose the correct. FASB ASC 805, “Business Combinations,” provides principles for allocating the fair value of an acquired business. When the collective fair values of the separately identified assets acquired and liabilities assumed exceed the fair value of the consideration transferred, the difference should be:a. Recognized as an ordinary gain from a bargain purchase.b. Treated as negative goodwill to be amortized over the period benefited, not to exceed 40 years.c. Treated as goodwill and tested for impairment on an annual basis.d. Applied pro rata to reduce, but not below zero, the amounts initially assigned to specific non-current assets of the acquired firm.arrow_forward
- Choose the correct. When should a consolidated entity recognize a goodwill impairment loss?a. If both the fair value of a reporting unit and its associated implied goodwill fall below their respective carrying amounts.b. Whenever the entity’s fair value declines significantly.c. If the fair value of a reporting unit with goodwill fall below its carrying amount.d. Annually on a systematic and rational basis.arrow_forwardGoodwill recognized in a business combination must be allocated among a firm’s identified reporting units. If the fair value of a particular reporting unit with recognized goodwill falls below its carrying amount, which of the following is true?a. No goodwill impairment loss is recognized unless the implied value for goodwill exceeds its carrying amount.b. A goodwill impairment loss is recognized if the carrying amount for goodwill exceeds its implied value.c. A goodwill impairment loss is recognized for the excess of a reporting unit’s carrying amount over its fair value, not to exceed the carrying amount of goodwill.d. The reporting unit reduces the values assigned to its long-term assets (including any unrecognized intangibles) to reflect its fair value.arrow_forwardWhich statement regarding goodwill is true? a. goodwill is an unidentifiable intangible assetb. internally developed goodwill should be capitalized while purchased goodwill should beexpensedc. goodwill can be defined as the value attached to the ability of a company to earn a higherthan normal rate of return on the book value of its identifiable assetsd. in some situations, FASB Statement No. 141 requires that negative goodwill be recordedarrow_forward
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