In a goal to expand their user base, social media giant OneWorld acquired a small start-up company MyLife for $51,100,000 cash. An appraiser assessed the fair market value of the tangible assets of MyLife at $25,110,000 at the date of acquisition. The deal stipulated that OneWorld will not assume any responsibility for the liabilities of MyLife. A decade later, much of the data provided to OneWorld through the acquisition has also been acquired by their competitors. An appraiser determined that the current fair value of the goodwill to be $5,110,000. Required: a. Determine the amount of goodwill OneWorld should recognize at the date of acquisition. b. Should OneWorld recognize an impairment loss related to the change in value? If so, how much? a. Goodwill b. Is goodwill impaired? b. Impairment loss
In a goal to expand their user base, social media giant OneWorld acquired a small start-up company MyLife for $51,100,000 cash. An appraiser assessed the fair market value of the tangible assets of MyLife at $25,110,000 at the date of acquisition. The deal stipulated that OneWorld will not assume any responsibility for the liabilities of MyLife. A decade later, much of the data provided to OneWorld through the acquisition has also been acquired by their competitors. An appraiser determined that the current fair value of the goodwill to be $5,110,000. Required: a. Determine the amount of goodwill OneWorld should recognize at the date of acquisition. b. Should OneWorld recognize an impairment loss related to the change in value? If so, how much? a. Goodwill b. Is goodwill impaired? b. Impairment loss
Chapter14: Property Transactions: Capital Gains And Losses, § 1231, And Recapture Provisions
Section: Chapter Questions
Problem 75P
Related questions
Question
Transcribed Image Text:In a goal to expand their user base, social media giant OneWorld acquired a small start-up company MyLife for $51,100,000 cash. An
appraiser assessed the fair market value of the tangible assets of MyLife at $25,110,000 at the date of acquisition. The deal stipulated
that OneWorld will not assume any responsibility for the liabilities of MyLife.
A decade later, much of the data provided to OneWorld through the acquisition has also been acquired by their competitors. An
appraiser determined that the current fair value of the goodwill to be $5,110,000.
Required:
a. Determine the amount of goodwill OneWorld should recognize at the date of acquisition.
b. Should OneWorld recognize an impairment loss related to the change in value? If so, how much?
a. Goodwill
b. Is goodwill impaired?
b. Impairment loss
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College
Principles of Accounting Volume 1
Accounting
ISBN:
9781947172685
Author:
OpenStax
Publisher:
OpenStax College