Grand Champion Inc. purchased America’s Sweethearts Corporation on January 1, 2019. At the time, America’s Sweethearts had the following assets and liabilities (stated at fair value): Cash $63,000 Accounts receivable 137,000 Inventory 185,000 Property, plant, and equipment 300,000 Patent 65,000 Accounts payable 220,000 Notes payable 325,000   Grand Champion paid $900,000 for America’s Sweethearts. 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 $730,000 and a book value of $870,000, which includes any goodwill recorded. Of this fair value, $340,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities. Required:   Calculate the impairment loss of goodwill (if any) and record the appropriate journal entry.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Grand Champion Inc. purchased America’s Sweethearts Corporation on January 1, 2019. At the time, America’s Sweethearts had the following assets and liabilities (stated at fair value):
Cash $63,000
Accounts receivable 137,000
Inventory 185,000
Property, plant, and equipment 300,000
Patent 65,000
Accounts payable 220,000
Notes payable 325,000
 
Grand Champion paid $900,000 for America’s Sweethearts. 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 $730,000 and a book value of $870,000, which includes any goodwill recorded. Of this fair value, $340,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities.
Required:
  Calculate the impairment loss of goodwill (if any) and record the appropriate journal entry.
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Goodwill refers to an asset which intangible in nature and in simple terms can be regarded as the reputation of any organization. When a firm pays more than the fair market value (FMV) of the net assets while acquiring any business if another company, that extra amount paid is for goodwill.

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