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 $62,000 Accounts receivable 138,000 Inventory 185,000 Property, plant, and equipment 300,000 Patent 65,000 Accounts payable 200,000 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 $720,000 and a book value of $850,000, which includes any goodwill recorded. Of this fair value, $350,000 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.
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 $62,000 Accounts receivable 138,000 Inventory 185,000 Property, plant, and equipment 300,000 Patent 65,000 Accounts payable 200,000 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 $720,000 and a book value of $850,000, which includes any goodwill recorded. Of this fair value, $350,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 | $62,000 |
| 138,000 | |
| Inventory | 185,000 |
| Property, plant, and equipment | 300,000 |
| Patent | 65,000 |
| Accounts payable | 200,000 |
| 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 $720,000 and a book value of $850,000, which includes any
Required:
| Calculate the impairment loss of goodwill (if any) and record the appropriate |
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