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. 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. C. 530000 485000 450000
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. 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. C. 530000 485000 450000
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
3
Transcribed Image Text: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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