On January 1, Year 1, East Company purchased West Company. East Company paid $670,000 cash and assumed all of West Company's liabilities. West's books showed tangible assets of $578,000, liabilities of $54,000, and equity of $632,000. An appraiser assessed the fair market value of the tangible assets at $622,000 at the date of acquisition. On December 31, Year 4 East determines that the goodwill suffered a $32,000 permanent impairment. However, on December 31, Year 6 East estimated that it had recovered $12,000 of the impairment that had previously been considered to be permanent impairment. Based on this information, the book value of the goodwill shown on the December 31, Year 6 balance sheet is: Multiple Choice O O O $102,000. $134,000. $54,000. $70,000.
On January 1, Year 1, East Company purchased West Company. East Company paid $670,000 cash and assumed all of West Company's liabilities. West's books showed tangible assets of $578,000, liabilities of $54,000, and equity of $632,000. An appraiser assessed the fair market value of the tangible assets at $622,000 at the date of acquisition. On December 31, Year 4 East determines that the goodwill suffered a $32,000 permanent impairment. However, on December 31, Year 6 East estimated that it had recovered $12,000 of the impairment that had previously been considered to be permanent impairment. Based on this information, the book value of the goodwill shown on the December 31, Year 6 balance sheet is: Multiple Choice O O O $102,000. $134,000. $54,000. $70,000.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On January 1, Year 1, East Company purchased West Company. East Company paid $670,000 cash and assumed all of West Company's liabilities.
West's books showed tangible assets of $578,000, liabilities of $54,000, and equity of $632,000. An appraiser assessed the fair market value of the
tangible assets at $622,000 at the date of acquisition. On December 31, Year 4 East determines that the goodwill suffered a $32,000 permanent
impairment. However, on December 31, Year 6 East estimated that it had recovered $12,000 of the impairment that had previously been considered to
be permanent impairment. Based on this information, the book value of the goodwill shown on the December 31, Year 6 balance sheet is:
Multiple Choice
O
O
O
$102,000.
$134,000.
$54,000.
$70,000.
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