Intermediate Accounting
3rd Edition
ISBN: 9780136912644
Author: Elizabeth A. Gordon; Jana S. Raedy; Alexander J. Sannella
Publisher: Pearson Education (US)
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 12.7BE
To determine
To explain: Whether the
Given information:
Book value of goodwill is $600,000.
The fair value of reporting unit is $2,500,000.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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
$22,000
What should be the carrying value of goodwill for reporting unit A at
year - end? What should be the carrying value of goodwill for
reporting unit D at year-end ? What impairment loss should
reporting unit B report for the year?\table [[Reporting Unit, A, B, C, D
Reporting Unit
Carrying Value of reporting unit
Goodwill included in carrying value
Fair Value of net identifiable assets at year-end
Fair Value of reporting unit at year-end
G
A
$600,000
$60,000
$600,000
$590,000
B
C
$330,000
$520,000
$48,000
$40,000
$300,000
$500,000
$305,000 $585,000
D
$380,000
$28,000
$375,000
$400,000
Following is information about the reporting unit of Y company as of 12/31/19
The fair value of the reporting unit of Y company is $310,000 and the fair value of identifiable net assets excluding goodwill is $270,000.
The total carrying value of the unit is $320,000. The carrying value of identifiable net assets excluding goodwill is $260,000. The carrying value of goodwill is $60,000.
Required: compute the goodwill impairment loss if any for 2019. Show work
$10,000
$20.000
$40,000
$0
Chapter 12 Solutions
Intermediate Accounting
Ch. 12 - Prob. 12.1QCh. 12 - Can firms group all property, plant, and equipment...Ch. 12 - Prob. 12.3QCh. 12 - Prob. 12.4QCh. 12 - Do firms follow the same steps for impairment...Ch. 12 - Prob. 12.6QCh. 12 - Prob. 12.7QCh. 12 - Prob. 12.8QCh. 12 - Under IFRS, if a firm recovers an impairment loss...Ch. 12 - Under IFRS, when do firms test plant assets and...
Ch. 12 - Prob. 12.11QCh. 12 - Prob. 12.12QCh. 12 - Prob. 12.1MCCh. 12 - Prob. 12.2MCCh. 12 - Prob. 12.3MCCh. 12 - Prob. 12.4MCCh. 12 - Prob. 12.5MCCh. 12 - Prob. 12.6MCCh. 12 - Prob. 12.1BECh. 12 - Prob. 12.2BECh. 12 - Prob. 12.3BECh. 12 - Prob. 12.4BECh. 12 - Indefinite-Life Intangible Asset Impairment....Ch. 12 - Prob. 12.6BECh. 12 - Prob. 12.7BECh. 12 - Prob. 12.8BECh. 12 - Prob. 12.9BECh. 12 - Prob. 12.10BECh. 12 - Prob. 12.11BECh. 12 - Prob. 12.12BECh. 12 - Prob. 12.13BECh. 12 - Prob. 12.14BECh. 12 - Prob. 12.15BECh. 12 - Prob. 12.16BECh. 12 - Prob. 12.17BECh. 12 - Prob. 12.18BECh. 12 - Prob. 12.19BECh. 12 - Prob. 12.20BECh. 12 - Prob. 12.21BECh. 12 - Prob. 12.22BECh. 12 - Prob. 12.23BECh. 12 - Tangible Asset Impairment. Henne Optical...Ch. 12 - Tangible Asset Impairment Loss. Use the same...Ch. 12 - Prob. 12.3ECh. 12 - Prob. 12.4ECh. 12 - Prob. 12.5ECh. 12 - Tangible Asset Impairment Loss, IFRS. Use the same...Ch. 12 - Prob. 12.7ECh. 12 - Prob. 12.8ECh. 12 - Prob. 12.9ECh. 12 - Assets Held for Disposal. Hattie Corporation...Ch. 12 - Prob. 12.11ECh. 12 - Asset Revaluation, Downwards, IFRS. Lousa Company...Ch. 12 - Tangible Asset Impairment. Chrispian Cookies, Inc....Ch. 12 - Prob. 12.2PCh. 12 - Tangible Asset Impairment. Using the same...Ch. 12 - Prob. 12.4PCh. 12 - Goodwill Impairment, Tangible Fixed Assets, and...Ch. 12 - Tangible Asset Impairment, Potential Reversal,...Ch. 12 - Prob. 12.7PCh. 12 - Prob. 12.8PCh. 12 - Prob. 12.9PCh. 12 - Comprehensive Asset Revaluation Problem (Initial...Ch. 12 - Prob. 12.11PCh. 12 - Judgment Case 1: Impairments of PPE under IFRS...Ch. 12 - Prob. 2JCCh. 12 - Prob. 3JCCh. 12 - Financial Statement Analysis Case 1: Long-Lived...Ch. 12 - Surfing the Standards Case 1: Impairments of PPE...Ch. 12 - Prob. 2SSCCh. 12 - Prob. 1BCCCh. 12 - Basis for Conclusions Case 2: Intangible Assets ...Ch. 12 - Basis for Conclusions Case 3: Goodwill Impairment...
Knowledge Booster
Similar questions
- Factor Company’s cash generating unit has been assessed for impairment and it has been determined that the unit has incurred an impairment loss of P240,000. The carrying amounts of the assets were as follows: Building P6,000,000; Land P3,500,000; Equipment P2,000,000; Vehicles P2,500,000. The cash generating unit has not recorded goodwill. If the fair value less cost to sell of the building is P5,960,000, what amount of impairment should be allocated to the equipment?arrow_forwardOn December 31, 20x1, Entity A determines that its building is impaired. Entity A gathers the following information: Building 2,000,000 Accumulated depreciation 600,000 Fair value less costs of disposal (FVLCD) 900,000 Value in use (VIU) 1,080,000 After the impairment, the building is assessed to have a remaining useful life of six years and no residual value. How much is the impairment loss?arrow_forwardOn December 31, 20x1, Entity A determines that its building is impaired. Entity A gathers the following information: Building 2,000,000 Accumulated depreciation 600,000 Fair value less costs of disposal (FVLCD) 900,000 Value in use (VIU) 1,080,000 After the impairment, the building is assessed to have a remaining useful life of six years and no residual value. How much is the impairment loss? a. 320,000 b. 180,000 c. 500,000 d. 270,000arrow_forward
- On December 31, 20x1, Entity A determines that its building is impaired. The following information is gathered: Building Accumulated Depreciation Fair Value less Cost of Disposal 1,000,000 200,000 600,000 580,000 Value in Use How much is the impairment loss?arrow_forwardCase 5. The assets of a CGU at year-end are as follows: Property, Plant and Equipment Patent Goodwill Carrying amount 2,500,000 3,500,000 1,000,000 Fair value 2,000,000 3,000,000 1,000,000 The most recent review assesses the value in use of the CGU to be 4,500,000. 24. What total amount should be reported as impairment loss on goodwill? 25. What is the impairment loss to be allocated to the PPE?arrow_forwardOn December 31, 20x1, Entity A determines that its building is impaired. Entity A gathers the following information: Building 2,000,000 Accumulated depreciation 600,000 Fair value less costs of disposal (FVLCD) 900,000 Value in use (VIU) 1,080,000 After the impairment, the building is assessed to have a remaining useful life of six years and no residual value. On December 31, 20x2, Entity A determines an indication that the impairment loss recognized in the prior period may no longer exist. The revised recoverable amount of the building on December 31, 20x2 is ₱1,280,000. If no impairment loss had been recognized in the prior period, the carrying amount of the building on December 31, 20x2 would have been ₱1,200,000. How much is the gain on reversal of impairment on December 31, 20x2? a. 314,351 b. 312,156 c. 303,315 d. 300,000arrow_forward
- The Cello Co. is considering whether according to IAS 36 - 'Impairment of Assets', any impairment loss has occurred on its major factory in the Sohar industrial area. Current carrying value (i.e. cost less accumulated depreciation), OMR 80m. Value in use, OMR 120m and Fair value less cost of disposal, OMR 60m. What is the amount of the impairment loss to be recognized? O a. Impairment loss: Nil. O b. Impairment loss: OMR 20,000. O c Impairment loss: OMR 60,000. O d. Impairment loss: OMR 40,000.arrow_forwardSilver Company operates a production line which is treated as a cash generating unit for impairment review purposes. At year-end, the carrying amounts of the noncurrent assets are as follows: 1,100,000 Goodwill Machinery 2,200,000 The value in use of the production line is estimated at P2,700,000 at this time. 7. What is the revised carrying amount of goodwill after recognition of impairment? a. 1,100,000 b. 900,000 C. d. 500,000 800,000 8. What is the revised carrying amount of machinery after recognition of impairment? a. 2,200,000 b. 1,800,000 c. 1,600,000 d. 1,900,000arrow_forwardBravo Ltd classified one of its buildings as a non-current asset held for sale. This building was measured at cost less accumulated depreciation. It is currently carried at fair value less costs to sell of 150,000. At year end the fair value less costs to sell was 155,500 impairment losses previously recognized unde IAS36 impairment of assets are 1,500 and under IFRS5 1,500 how much of the impairment loss can be reservedarrow_forward
- Identifying and Recording Impairment Loss on Plant Asset Three cases are provided below concerning a plant asset currently used in operations. Case Carrying Value Recoverable Cost Fair Value A $18,000 B 16,000 с 12,000 $16,000 18,000 24,000 $24,000 26,000 16,000 Required a. Which case(s), if any, requires an impairment loss to be recognized, and for what amount? Assume that indicators of impairment are present in all cases. Case A $ Case B $ Case C $ Note: If the asset is not impaired, enter a zero (or leave blank) for the loss. Note: Do not use negative signs with your answers. Impairment Loss b. Record the entry for the impairment loss on the case(s) identified in part a (if any). Note: If a line in a journal entry isn't required for the transaction, select "N/A" as the account names and leave the Dr. and Cr. answers blank (zero). Account Name ♦ ♦ Dr. Cr.arrow_forwardGoodwill Impairment On January 1, 20Y3, The Simmons Group, Inc., purchased the assets of NWS Insurance Co. for $39,457,500, a price reflecting an $5,918,625 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 $2,219,484. a. Determine the book value of the goodwill on December 31, 20Y9, prior to making the impairment adjustment.$fill in the blank 1 b. Illustrate the effects on the accounts and financial statements of the December 31, 20Y9, adjustment for the goodwill impairment. For decreases in accounts or outflows of cash, enter your answers as negative numbers. If no account or activity is affected, select "No effect" from the dropdown and leave the corresponding number entry box blank. Balance Sheet Assets = Liabilities + Stockholders' Equity Goodwill + No effect = No effect + Retained Earnings 20Y9 Dec. 31. fill in the blank 6 fill in the blank 7 fill in the…arrow_forwarddetermine the goodwill impairment Net book value of Devon 3,600,000 Goodwill included in net book value 1,400,000 Fair value of Devon 2,800,000 Fair value of Devon's identifiable net assets, excluding goodwill 5,200,000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning