26. On January 1, 2022, Campbell Corp. purchases 100% of Manning Inc. for $9.6 million. At the time of acquisition, the fair market value of Manning's tangible net assets (excluding goodwill) is $7.9 million. Campbell ascribes the excess of $1,700,000 to goodwill. During the year the fair value of Manning declines to $8.0 million and the fair value of Manning's tangible net assets is estimated at $6.8 million as of December 31, 2022. a. Determine if the goodwill has become impaired and, if so, the amount of the impairment. b. What impact does the impairment of goodwill have on Campbell Corp's financial statements?

26. On January 1, 2022, Campbell Corp. purchases 100% of Manning Inc. for $9.6 million. At the time of acquisition, the fair market value of Manning's tangible net assets (excluding goodwill) is $7.9 million. Campbell ascribes the excess of $1,700,000 to goodwill. During the year the fair value of Manning declines to $8.0 million and the fair value of Manning's tangible net assets is estimated at $6.8 million as of December 31, 2022. a. Determine if the goodwill has become impaired and, if so, the amount of the impairment. b. What impact does the impairment of goodwill have on Campbell Corp's financial statements?

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

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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…
Kosher Pickle Company acquires all the outstanding stock of Midwest Produce for $19 million. The fair value of Midwest’s assets is $14.3 million. The fair value of Midwest’s liabilities is $2.5 million. Calculate the amount paid for goodwill.
Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $792,000 in cash. This portion of the consideration transferred results in a fair- value allocation of $41,700 to equipment and goodwill of $108,300. At the acquisition date, Camille also agrees to pay Jordan's previous owners an additional $159,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordan's profits exceed this threshold in both years. Which of the following is true? The additional $159,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings. Consolidated goodwill as of January 1, 2021, increases by $159,000. The $159,000 is recorded as a revaluation gain in 2021. The fair value of the expected contingent payment increases goodwill at the acquisition date.
Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $880,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $36,600 to equipment and goodwill of $101,700. At the acquisition date, Camille also agrees to pay Jordan’s previous owners an additional $147,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordan’s profits exceed this threshold in both years. Which of the following is true? Multiple Choice Consolidated goodwill as of January 1, 2021, increases by $147,000. The additional $147,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings. The $147,000 is recorded as a revaluation gain in 2021. The fair value of the expected contingent payment increases goodwill at the acquisition date.
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Camille, Inc., bought all outstanding shares of Jordan Corporation on January 1, 2019, for $734,000 in cash. This portion of the consideration transferred results in a fair-value allocation of $53,400 to equipment and goodwill of $112,200. At the acquisition date, Camille also agrees to pay Jordan’s previous owners an additional $152,000 on January 1, 2021, if Jordan earns a 10 percent return on the fair value of its assets in 2019 and 2020. Jordan’s profits exceed this threshold in both years. Which of the following is true? Multiple Choice Consolidated goodwill as of January 1, 2021, increases by $152,000. The additional $152,000 payment is reported as an adjustment to the beginning balance of consolidated retained earnings. The fair value of the expected contingent payment increases goodwill at the acquisition date. The $152,000 is recorded as a revaluation gain in 2021.
ProForm acquired 70 percent of ClipRite on June 30, 2020, for $910,000 in cash. Based on ClipRite’s acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2021 financial statements are as follows: ProForm ClipRite Sales $ (800,000 ) $ (600,000 ) Cost of goods sold 535,000 400,000 Operating expenses 100,000 100,000 Dividend income (35,000 ) 0 Net income $ (200,000 ) $ (100,000 ) Retained earnings, 1/1/21 $ (1,300,000 ) $ (850,000 ) Net income (200,000 ) (100,000 ) Dividends declared 100,000 50,000 Retained earnings, 12/31/21 $ (1,400,000 ) $ (900,000 ) Cash and receivables $ 400,000 $ 300,000 Inventory 290,000 700,000 Investment in ClipRite 910,000 0…
ProForm acquired 70 percent of ClipRite on June 30, 2020, for $910,000 in cash. Based on ClipRite’s acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $10,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $390,000 at the acquisition date. The 2021 financial statements are as follows: *see image ClipRite sold ProForm inventory costing $72,000 during the last six months of 2020 for $120,000. At year-end, 30 percent remained. ClipRite sold ProForm inventory costing $200,000 during 2021 for $250,000. At year-end, 10 percent is left. Determine the consolidated balances for the following: SalesCost of Goods SoldOperating ExpensesDividend IncomeNet Income Attributable to Noncontrolling InterestInventoryNoncontrolling Interest in Subsidiary, 12/31/21
24. Badreah Company acquired 90% of Rose Company several years ago for which the consideration transferred included an amount paid for goodwill of $200,000 at that date. During 2020 an analysis of the fair value of Roxy's assets determined an impairment of goodwill in the amount of $50,000.There was a goodwill of 25,000 in the books of the subsidiary and 100,00 in the books of the parent. At what amount would consolidated goodwill be reported for 2020? 1. $150,000. 2. $100,000. 3. $25,000. 4,.$175,000 5. $275,,000.
Vala
In 2021, Colburn Inc. had acquired Pebble Co. and recorded goodwill of $245 million as a result. The net assets (including goodwill) from Colburn's acquisition of Pebble Co. had a 2022 year-end book value of $580 million. Colburn assessed the fair value of Pebble at this date to be $700 million, while the fair value of all of Pebble 's identifiable tangible and intangible assets (excluding goodwill) was $550 million. The amount of the impairment loss that Colburn would record for goodwill at the end of 2022 is: $0. $95 million. $150 million. None of the above is correct.
ProForm acquired 60 percent of ClipRite on June 30, 2020, for $1,140,000 in cash. Based on ClipRite's acquisition-date fair value, an unrecorded intangible of $400,000 was recognized and is being amortized at the rate of $15,000 per year. No goodwill was recognized in the acquisition. The noncontrolling interest fair value was assessed at $760,000 at the acquisition date. The 2021 financial statements are as follows: Sales Cost of goods sold Operating expenses Dividend income Net income Retained earnings, 1/1/21 Net income Dividends declared Retained earnings, 12/31/21 Cash and receivables Inventory Investment in ClipRite Fixed assets Accumulated depreciation Totals Liabilities Common stock Retained earnings, 12/31/21 Totals Sales Cost of Goods Sold ProForm (900,000) 585,000 200,000 (48,000) $ (163,000) $ $ 500,000 390,000 1,140,000 2,000,000 (700,000) $ 3,330,000 $ (667,000) (400,000) (2,263,000) $ (3,330,000) Sales Cost of goods sold Operating expenses Dividend income Net income…