On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $510 million. The fair value of Harman's identifiable tangible and intangible assets totaled $575 million, and the fair value of liabilities assumed by Pesky was $149 million.   Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information:         Fair value of Harman, Inc. $ 490 million Fair value of Harman's net assets (excluding goodwill)   430 million Book value of Harman's net assets (including goodwill)   518 million     Required: 1. Determine the amount of goodwill that resulted from the Harman acquisition. 2. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2021, if any. 3. If an impairment loss is required, prepare the journal entry to record the loss.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $510 million. The fair value of Harman's identifiable tangible and intangible assets totaled $575 million, and the fair value of liabilities assumed by Pesky was $149 million.
 
Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information:

       
Fair value of Harman, Inc. $ 490 million
Fair value of Harman's net assets (excluding goodwill)   430 million
Book value of Harman's net assets (including goodwill)   518 million
 

 
Required:
1. Determine the amount of goodwill that resulted from the Harman acquisition.
2. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2021, if any.
3. If an impairment loss is required, prepare the journal entry to record the loss.

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