BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281

Solutions

Chapter
Section
BuyFindarrow_forward

Intermediate Accounting: Reporting...

3rd Edition
James M. Wahlen + 2 others
ISBN: 9781337788281
Textbook Problem
1 views

Using the information from RE12-9, assume that America’s Sweethearts is a reporting unit of Grand Champion. At the end of 2020, America’s Sweethearts has a fair value of $720,000 and a book value of $850,000, which includes any goodwill recorded in RE12-9. Of this fair value, $350,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities. Calculate the impairment loss of goodwill (if any) and record the appropriate journal entry.

To determine

Calculate the impairment loss of goodwill and prepare journal entry to record the appropriate journal entry.

Explanation

Goodwill: Goodwill is the good reputation developed by a company over years. This is recorded as an intangible asset, and is quantified when other company acquires. Goodwill should be recorded only when one company is acquired by another company. Goodwill value would be impaired, if the book value of goodwill is less than fair market value.

Calculate the impairment loss of goodwill and prepare journal entry to record the appropriate journal entry as follows:

Impairment loss of goodwill:

Impairment loss = Fair valueBook value=$720,000$850,000=($130,000)

Therefore, the impairment loss of goodwill at December 31, 2020 is $130,000

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

Why should policymakers think about incentives?

Principles of Economics (MindTap Course List)

Explain the various types of pricing objectives.

Foundations of Business (MindTap Course List)

Why do economists make assumptions?

Principles of Microeconomics (MindTap Course List)

CURRENT YIELD, CAPITAL GAINS YIELD, AND YIELD TO MATURITY Hooper Printing Inc. has bonds outstanding with 9 yea...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)