In January 1, 2015, Fun company purchased Company A for $40,000 in cash and paid immediately. Fun company assumed all of Company A's assets and assumed Company A's liabilities. company A has assets valued at $60,000 and liabilities valued at $50,000. Question 2: in 2016, fun company must test for the impairment of goodwill. Assume the only goodwill on fun company's books is from the acquisition of company A. Fun company determined that the goodwill has an estimated future cash flow of $25,000 and a fair market value of $20,000. Does fun company have to recognize an impairment? Why or why not? If an impairment must be recognized, compute the impairment loss and record the journal entry. ACTUAL QUESTION: suppose that the estimated future cash flow of goodwill in question #2 is $32,000, while the fair market value continues to be $20,000. Does fun company have to recognize an impairment? Why or why not? If an impairment must be recognized, compute the impairment loss and record the journal entry.
In January 1, 2015, Fun company purchased Company A for $40,000 in cash and paid immediately. Fun company assumed all of Company A's assets and assumed Company A's liabilities. company A has assets valued at $60,000 and liabilities valued at $50,000.
Question 2:
in 2016, fun company must test for the impairment of
If an impairment must be recognized, compute the impairment loss and record the
ACTUAL QUESTION:
suppose that the estimated future cash flow of goodwill in question #2 is $32,000, while the fair market value continues to be $20,000. Does fun company have to recognize an impairment? Why or why not? If an impairment must be recognized, compute the impairment loss and record the journal entry.
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