Required: Determine the amount of goodwill impairment, if any, that should be recognized at December 31, 20X4, if the fair value of the Plastic reporting =unit is determined to be | a. b. 2 c. 3 4 Rubber Corporation acquired all of the common stock of Plastic Company for $450,000 on January 1, 20X4. On that date, Plastic's identifiable net assets had a fair value of $390,000. The assets acquired in the purchase of Plastic are considered to be a separate reporting unit of Rubber. The carrying value of the Plastic reporting unit's net assets at December 31, 20X4, is $500,000. 5 a. 5 b. D 7 c. B 9 Step 1: For Goodwill Impairment Testing 1 a. 2 b. 3 с. 5 530000 485000 450000 Goodwill Impairment 60000 7 a. B b. e c. D Fair Value of Reporting Unit Carrying Value of Reporting Unit 4 5 Step 2: For Goodwill Impairment Testing V Fair Value of Fair Value of Reporting Indentifiable Unit Assets Fair Value - Carrying Value ▼ Impairment Indicated (Yes/No) No Yes Yes Implied Fair Value of Book Value of Goodwill Goodwill Fair Value vs. Book Impairment Reported Value (Yes/No) Goodwill No Yes Yes Y ▼ T

Required: Determine the amount of goodwill impairment, if any, that should be recognized at December 31, 20X4, if the fair value of the Plastic reporting =unit is determined to be | a. b. 2 c. 3 4 Rubber Corporation acquired all of the common stock of Plastic Company for $450,000 on January 1, 20X4. On that date, Plastic's identifiable net assets had a fair value of $390,000. The assets acquired in the purchase of Plastic are considered to be a separate reporting unit of Rubber. The carrying value of the Plastic reporting unit's net assets at December 31, 20X4, is $500,000. 5 a. 5 b. D 7 c. B 9 Step 1: For Goodwill Impairment Testing 1 a. 2 b. 3 с. 5 530000 485000 450000 Goodwill Impairment 60000 7 a. B b. e c. D Fair Value of Reporting Unit Carrying Value of Reporting Unit 4 5 Step 2: For Goodwill Impairment Testing V Fair Value of Fair Value of Reporting Indentifiable Unit Assets Fair Value - Carrying Value ▼ Impairment Indicated (Yes/No) No Yes Yes Implied Fair Value of Book Value of Goodwill Goodwill Fair Value vs. Book Impairment Reported Value (Yes/No) Goodwill No Yes Yes Y ▼ T

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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Question

100%

H~3&500
1
2
4
6
Required:
Determine the amount of goodwill impairment, if any, that should be recognized at December 31, 20X4, if the fair value of the Plastic reporting
8 unit is determined to be
9
10 a.
11 b.
12 c.
13
14
7
Rubber Corporation acquired all of the common stock of Plastic Company for $450,000 on January 1, 20X4. On that date, Plastic's identifiable net assets had a fair
value of $390,000. The assets acquired in the purchase of Plastic are considered to be a separate reporting unit of Rubber. The carrying value of the Plastic reporting
unit's net assets at December 31, 20X4, is $500,000.
20
15 a.
16
b.
17 C.
18
19 Step 1: For Goodwill Impairment Testing
26
530000
485000
450000
27
28
29 C.
30
31
Goodwill
Impairment
60000
a.
b.
Fair Value of
Reporting
Unit
21 a.
22
b.
23 C.
24
25 Step 2: For Goodwill Impairment Testing
Carrying
Value of
Reporting
Unit
Fair Value -
Carrying
Value
Fair Value of Fair Value of
Reporting Indentifiable
Unit
Assets
Impairment
Indicated
(Yes/No)
No
Yes
Yes
Fair Value
Implied Fair
Value of Book Value of vs. Book Impairment Reported
Goodwill Goodwill Value (Yes/No) Goodwill
No
Yes
Yes
▼

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