In 2019, Quasar Ltd. acquired all of the common stock of Penlight Laser for $124 million. The fair value of Penlight's identifiable tangible and intangible assets totaled $205 million, and the fair value of liabilities assumed by Quasar was $95 million. Quasar performed a required goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information: Fair value of Penlight (reporting unit) Fair value of Penlight's net assets (excluding goodwill) Book value of Penlight's net assets (including goodwill) Present value of Penlight's estimated future cash flows $115 million 107 million 125 million 110 million Required: 1.) Determine the amount of goodwill impairment loss in 2021. 2.) What will the goodwill balance be (after any impairment loss is recorded)?

In 2019, Quasar Ltd. acquired all of the common stock of Penlight Laser for $124 million. The fair value of Penlight's identifiable tangible and intangible assets totaled $205 million, and the fair value of liabilities assumed by Quasar was $95 million. Quasar performed a required goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information: Fair value of Penlight (reporting unit) Fair value of Penlight's net assets (excluding goodwill) Book value of Penlight's net assets (including goodwill) Present value of Penlight's estimated future cash flows $115 million 107 million 125 million 110 million Required: 1.) Determine the amount of goodwill impairment loss in 2021. 2.) What will the goodwill balance be (after any impairment loss is recorded)?

Intermediate Accounting: Reporting And Analysis

3rd Edition

ISBN:9781337788281

Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach

Chapter12: Intangibles

Section: Chapter Questions

Problem 19E

See similar textbooks

Similar questions

On May 28, 2024, Pesky Corporation acquired all of the outstanding common stock of Harman, Incorporated, for $620 million. The fair value of Harman's identifiable tangible and intangible assets totaled $652 million, and the fair value of liabilities assumed by Pesky was $178 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2024. Management has provided the following information: Fair value of Harman, Incorporated Fair value of Harman's net assets (excluding goodwill) Book value of Harman's net assets (including goodwill) Required: 1. Determine the amount of goodwill that resulted from the Harman acquisition. 2. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2024, if any. 3. If an impairment loss is required, prepare the journal entry to record the loss. $ 600 million. 540 million 630 million
In 2019, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to goodwill. At the end of 2021, management has provided the following information for a required goodwill impairment test: Fair value of Centerpoint Inc. $220millionBook value of Centerpoint’s net assets (excluding goodwill) 200millionBook value of Centerpoint’s net assets (including goodwill) 250million Required:1. Determine the amount of the impairment loss.2. Repeat requirement 1 assuming that the fair value of Centerpoint is $270 million.
On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $620 million. The fair value of Harman's identifiable tangible and intangible assets totaled $652 million, and the fair value of liabilities assumed by Pesky was $178 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information: Fair value of Harman, Inc. Fair value of Harman's net assets (excluding goodwill) Book value of Harman's net assets (including goodwill) $600 million 540 million 630 million Required: 1. Determine the amount of goodwill that resulted from the Harman acquisition. 2. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2021, if any. 3. If an impairment loss is required, prepare the journal entry to record the loss.
In 2019, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to goodwill. At the end of 2021, management has provided the following information for a required goodwill impairment test: Fair value of Centerpoint Inc.$220million Book value of Centerpoint’s net assets (excluding goodwill) 200million Book value of Centerpoint’s net assets (including goodwill) 250million Determine the amount of the impairment loss
On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $510 million. The fair value of Harman's identifiable tangible and intangible assets totaled $575 million, and the fair value of liabilities assumed by Pesky was $149 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information: Fair value of Harman, Inc. $ 490 million Fair value of Harman's net assets (excluding goodwill) 430 million Book value of Harman's net assets (including goodwill) 518 million Required:1. Determine the amount of goodwill that resulted from the Harman acquisition.2. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2021, if any.3. If an impairment loss is required, prepare the journal entry to record the loss.
In 2019, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to goodwill. At the end of 2021, management has provided the following information for a required goodwill impairment test: Fair value of Centerpoint Inc. $ 220 million Book value of Centerpoint’s net assets (excluding goodwill) 200 million Book value of Centerpoint’s net assets (including goodwill) 250 million 1. Determine the amount of the impairment loss. 2. Determine the amount of the impairment loss assuming that the fair value of Centerpoint is $270 million.
On May 28, 2024, Pesky Corporation acquired all of the outstanding common stock of Harman, Incorporated, for $460 million. The fair value of Harman's identifiable tangible and intangible assets totaled $540 million, and the fair value of liabilities assumed by Pesky was $180 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2024. Management has provided the following information: Fair value of Harman, Incorporated $ 440 million Fair value of Harman's net assets (excluding goodwill) 375 Book value of Harman's net assets (including goodwill) 458 million million Required: 1. Determine the amount of goodwill that resulted from the Harman acquisition. 2. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2024, if any. 3. If an impairment loss is required, prepare the journal entry to record the loss.
During 2021, Cullumber Company purchased the net assets of Riverbed Corporation for $2206600. On the date of the transaction, Riverbed had $601800 of liabilities. The fair value of Riverbed's assets when acquired were as follows: Current assets $1083240 Noncurrent assets 2527560 $3610800 How should the $802400 difference between the fair value of the net assets acquired ($3009000) and the cost ($2206600) be accounted for by Cullumber? O The current assets should be recorded at $1083240 and the noncurrent assets should be recorded at $1725160. O A deferred credit of $802400 should be set up and then amortized to income over a period not to exceed forty years. O The $802400 difference should be recognized as a gain. O The $802400 difference should be credited to retained earnings.
Tamara Corporation acquired XW Products on January 1, 2020 for $6,400,000, and recorded goodwill of $1,200,000 as a result of that purchase. At December 31, 2021, the XW Products Division had a fair value of $5,450,000. The net identifiable assets of the Division (excluding goodwill) had a fair value of $4,745,000 at that time. What amount of loss on impairment of goodwill should Tamara record in 2021? 16.
Manara Corporation acquired Sama Products on January 1, 2019 for $4,000,000, and recorded goodwill of $750,000 as a result of that purchase. At December 31, 2019, Sama Products had a carrying value of $3,500,000, Also, it is determined that the current recoverable amount value of the Sama division is $2,900,000 at that time. What amount of loss on impairment of goodwill should Manara record in 20197 OA S710,000 OB $600,000 OC S480,000 OD S0
During 2022, Twenti Company, had the following transactions: On January 2, Twenti purchased the net assets of Terti Company for P360,000. The fair value of Terti’sidentifiable net assets was P172,000, Twenti believes that, due to the popularity of Terti’s consumerproducts, the life of the resulting goodwill is unlimited. On February 1, Twenti purchased a franchise to operate a ferry service from the state government forP60,000 and an annual fee of 1% of ferry revenues. The franchise expires after five years. Twentireceived P20,000 of ferry revenues in 2022. On April 5, Twenti granted a patent that had been applied for by Terti. During 2022, Twenti incurredlegal costs of P51,000 to register the patent and an additional of P85,000 to successfully prosecute apatent infringement suit against a competitor. Twenti estimates the patent’s economic life to be tenyears.Twenti has determine that it is appropriate to amortize these intangibles on the straight line basis over themaximum period…
In 2018, Martin Corp. acquired Glynco and recorded goodwill of $45 million. Martin considers Glynco a separate reporting unit. By the end of 2021, the net assets (including goodwill) of Glynco are $320 million and its estimated fair value is $260 million. The amount of the impairment loss that Martin would record for goodwill at the end of 2021 is: A) $0. B) $60 million. C) $45 million. D) $15 million.