* Identifiable Net Assets do not include goodwill. Prepare the journal entry, if needed, to record goodwill impairment at December 31, 2025. Use FASB's simplified approach to test for goodwill impairment (assume that the qualitative test is satisfied or bypassed). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List debit entry before credit entry.)
* Identifiable Net Assets do not include goodwill. Prepare the journal entry, if needed, to record goodwill impairment at December 31, 2025. Use FASB's simplified approach to test for goodwill impairment (assume that the qualitative test is satisfied or bypassed). (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the amounts. List debit entry before credit entry.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
3
Transcribed Image Text:(b)
Assume, further, that the acquisition was consummated on October 1, 2024, as described above. However, by the end of 2025,
Blue Spruce was concerned that the fair values of one or both of the acquired units had deteriorated. To test for impairment, Blue
Spruce decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the
reporting units (Ayayai and Concord). Blue Spruce accumulated the following data:
Year
2055
Ayayai
Concord
Present Value
of Future Cash Flows
$6,522,100
$1,881,180
Account Titles and Explanation
Assets (except goodwill)
Common Stock
Goodwill
Impairment Loss
Liabilities
Carrying Value of
Identifiable
Net Assets*
* Identifiable Net Assets do not include goodwill.
Prepare the journal entry, if needed, to record goodwill impairment at December 31, 2025. Use FASB's simplified approach to test
for goodwill impairment (assume that the qualitative test is satisfied or bypassed). (Credit account titles are automatically indented
when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter o for the
amounts. List debit entry before credit entry.)
No Entry
Other Contributed Capital
Retained Earnings
$6,369,640
$1,201,130
Fair Value
Identifiable
Net Assets
Debit
$6,379,640
$1,001,130
Credit
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