In 2010,Chesley Inc. acquired Corrigan Ltd. in a hostile takeover. However, the expect synergies never materialized. In 2013, Chesley decided to write-off $45 million of Goodwill on the financial statements to recognize that the Goodwill had become impaired. Which of the following items would be decreased by the impairment of Goodwill? (check all that apply) Goodwill Net Income Accumulated Other Comprehensiv Income Cash from Operating Activities Cash from Investing Activities

In 2010,Chesley Inc. acquired Corrigan Ltd. in a hostile takeover. However, the expect synergies never materialized. In 2013, Chesley decided to write-off $45 million of Goodwill on the financial statements to recognize that the Goodwill had become impaired. Which of the following items would be decreased by the impairment of Goodwill? (check all that apply) Goodwill Net Income Accumulated Other Comprehensiv Income Cash from Operating Activities Cash from Investing Activities

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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After conducting a thorough review of the company’s fi nancial statements, Martinez concludes the following:Conclusion 1 Although Stellar’s fi nancial statements adhere to generally accepted accounting principles (GAAP), Stellar understates earnings in periods whenthe company is performing well and overstates earnings in periods whenthe company is struggling.Conclusion 2 Stellar most likely understated the value of amortizable intangibles whenrecording the acquisition of Solar, Inc. last year. No goodwill impairmentcharges have been taken since the acquisition.Conclusion 3 Over time, the accruals component of Stellar’s earnings is large relative tothe cash component.Conclusion 4 Stellar reported an unusually sharp decline in accounts receivable in thecurrent year, and an increase in long-term trade receivables.2 . Based on Conclusion 2, after the acquisition of Solar, Stellar’s earnings are most likely :A . understated.B . fairly stated.C . overstated
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handy snacks inc dominates the snack-food industry with its salty chip brand. assume that handy snacks inc purchased super snacks, Inc, for 5.2 million cash. the market value of super snacks assets is 9 million, and super snacks has liabilities with a market value of 7.1 million 1. compute the cost of the Goodwill purchased by handy snacks 2. explain how handy snacks will account for Goodwill in future years
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On January 1, 2010, P Company acquired the net assets of S Company for $1,580,000 cash. The fair value of S Co. identifiable net assets was $1,310,000 on this date. P Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (S Co.). The information for these subsequent years is as follows: Carrying value of SCo. Identifiable Net Assets $1,160,000 $1,120,000 Fair Value S Co. Identifiable Net Assets $1,190,000 $1,210,000 Present value of Future Cash Flows $1,390,000 $1,400,000 Year 2011 2012 * Identifiable net assets do not include goodwil.
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