Nashs Construction & Paving expanded its business by purchasing Alcott Maintenance, a division that provides road maintenance services. The division was purchased three years ago for $3,227,000 and has been identified as a reporting unit. The net assets for the division including goodwill are as follows: Cash $239,000 Accounts Receivables 301,000 Inventory 838,000 Property, Plant & Equipment 1,019,000 Goodwill 1,193,000 Accounts Payable (120,000 ) Unearned Revenue (75,000 ) Net assets, at carrying amounts $3,395,000 The fair value of the Alcott Maintenance Division reporting unit as a whole is estimated to be $3,125,000. Management determines that the unit’s value in use is $3,231,000. Prepare any appropriate journal entries for goodwill impairment assuming that Nash Construction & Paving is reporting under ASPE. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
Nashs Construction & Paving expanded its business by purchasing Alcott Maintenance, a division that provides road maintenance services. The division was purchased three years ago for $3,227,000 and has been identified as a reporting unit. The net assets for the division including goodwill are as follows: Cash $239,000 Accounts Receivables 301,000 Inventory 838,000 Property, Plant & Equipment 1,019,000 Goodwill 1,193,000 Accounts Payable (120,000 ) Unearned Revenue (75,000 ) Net assets, at carrying amounts $3,395,000 The fair value of the Alcott Maintenance Division reporting unit as a whole is estimated to be $3,125,000. Management determines that the unit’s value in use is $3,231,000. Prepare any appropriate journal entries for goodwill impairment assuming that Nash Construction & Paving is reporting under ASPE. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Nashs Construction & Paving expanded its business by purchasing Alcott Maintenance, a division that provides road maintenance services. The division was purchased three years ago for $3,227,000 and has been identified as a reporting unit. The net assets for the division including goodwill are as follows:
The fair value of the Alcott Maintenance Division reporting unit as a whole is estimated to be $3,125,000. Management determines that the unit’s value in use is $3,231,000.
| Cash | $239,000 | ||
| Accounts Receivables | 301,000 | ||
| Inventory | 838,000 | ||
| Property, Plant & Equipment | 1,019,000 | ||
| Goodwill | 1,193,000 | ||
| Accounts Payable | (120,000 | ) | |
| Unearned Revenue | (75,000 | ) | |
| Net assets, at carrying amounts | $3,395,000 |
The fair value of the Alcott Maintenance Division reporting unit as a whole is estimated to be $3,125,000. Management determines that the unit’s value in use is $3,231,000.
Prepare any appropriate journal entries for goodwill impairment assuming that Nash Construction & Paving is reporting under ASPE. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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