On January 1, 2010, P Companyacquired the net assets of SCompany for $1,580,000 cash. Thefair value of S Co. identifiable netassets was $1,310,000 on this date. PCompany decided to measuregoodwill impairment using thepresent value of future cash flows toestimate the fair value of thereporting unit (S Co.). The informationfor these subsequent years is asfollows:Carrying value ofSCo. IdentifiableNet Assets$1,160,000$1,120,000Fair ValueS Co. IdentifiableNet Assets$1,190,000$1,210,000Present valueof Future Cash Flows$1,390,000$1,400,000Year20112012* Identifiable net assets do not include goodwil. The first step in determining goodwillimpairment involves comparing the *implied value of a reporting unit toits carrying amount (goodwillexcluded).fair value of a reporting unit to itscarrying amount (goodwillexcluded).Assets fair value of a reporting unitto its carrying amount (goodwillincluded).fair value of a reporting unit to itscarrying amount (goodwill included).None of the options is correct

Goodwill is an intangible asset. Mostly, it is recognized by the company when one company purchases…

The first step in determining goodwill impairment involves comparing the * implied value of a reporting unit to O its carrying amount (goodwill excluded). fair value of a reporting unit to its carrying amount (goodwill excluded). Assets fair value of a reporting unit O to its carrying amount (goodwill included). fair value of a reporting unit to its carrying amount (goodwill included). None of the options is correct

The first step in determining goodwill impairment involves comparing the * implied value of a reporting unit to O its carrying amount (goodwill excluded). fair value of a reporting unit to its carrying amount (goodwill excluded). Assets fair value of a reporting unit O to its carrying amount (goodwill included). fair value of a reporting unit to its carrying amount (goodwill included). None of the options is correct

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter11: Long-term Assets

Section: Chapter Questions

Problem 11PB: On May 1, 2015, Zoe Inc. purchased Branta Corp. for $15,000,000 in cash. They only received...

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On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,500 cash. The fair value of Saab’s identifiable net assets was $374,980 on this date. Porsche Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (Saab). The information for these subsequent years is as follows: Year Present Valueof Future Cash Flows Carrying Value ofSaab’s IdentifiableNet Assets* Fair ValueSaab’s IdentifiableNet Assets 2014 $400,620 $329,851 $339,983 2015 $399,230 $319,497 $345,596 2016 $350,150 $299,900 $325,360 * Identifiable net assets do not include goodwill. (a) For each year determine the amount of goodwill impairment, if any. 2014 2015 2016 Goodwill impairment $ $ $
Duko Corporation is acquiring the net assets, exclusive of cash, of Weber Company as of January 1, 2015, at which time Weber Company’s balance sheet is as follows: (see attachment)Duko Corporation feels that the following fair values should be used for Weber’s book values:Cash (no change) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,000Investment in marketable securities . . . . . . . . . . . . . . . . . . 150,000Land. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000Buildings (no change) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450,000Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600,000Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120,000Income tax payable (no change). . . . . . . . . . . . . . . . . . . . 190,000Duko will issue 20,000 shares of its common…
Blue Company owns a trade name that was purchased in an acquisition of McClellan Company. The trade name has a book value of $3,500,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Blue must estimate the fair value of the trade name. It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Blue's estimate of annual cash flows over the next 9 years. The trade name is assumed to have no salvage value after the 9 years. (Assume the cash flows occur at the end of each year.) Cash Flow Estimate $382.500 646,400 769,700 Probability Assessment Click here to view factor tables. Estimated fair value 20% $ 50% (a) What is the estimated fair value of the trade name? Blue determines that the appropriate discount rate for this estimation is 9%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.) 30%
Oriole Company's balance sheet at December 31, 2026 reports assets of $1054000 and liabilities of $722000. All of Oriole's assets' book values approximate their fair value, except for land, which has a fair value that is $62000 greater than its book value. In addition, notes payable has a fair value that exceeds its book value by $52000. On December 31, 2026, Ivanhoe Corporation paid $449000 to acquire Oriole. What amount of goodwill should Ivanhoe record as a result of this purchase? O $3000 O $55000 $117000 $107000
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Crane Company owns a trade name that was purchased in an acquisition of Wildhorse Co.. The trade name has a book value of $2200000, but according to IFRS, it is assessed for impairment on an annual basis. To perform this impairment test, Crane must estimate the fair value of the trade name. It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Crane's estimate of annual cash flows over the next 7 years. The trade name is assumed to have no residual value after the 7 years. (Assume the cash flows occur at the end of each year.) Probability Assessment Cash Flow Estimate 30% $250000 50% 360000 20% 450000 Crane determines that the appropriate discount rate for this estimation is 7%. To the nearest dollar, what is the estimated fair value of the trade name?
Kingbird Company owns a trade name that was purchased in an acquisition of McClellan Company. The trade name has a book value of $3,500,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Kingbird must estimate the fair value of the trade name. It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Kingbird's estimate of annual cash flows over the next 10 years. The trade name is assumed to have no salvage value after the 10 years. (Assume the cash flows occur at the end of each year.) Cash Flow Estimate $374,100 631,400 759,600 Probability Assessment Click here to view factor tables. Estimated fair value 20% LA 50% (a) What is the estimated fair value of the trade name? Kingbird determines that the appropriate discount rate for this estimation is 10%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places,…
Carla Company owns a trade name that was purchased in an acquisition of McClellan Company. The trade name has a book value of $3,500,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Carla must estimate the fair value of the trade name. It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Carla's estimate of annual cash flows over the next 9 years. The trade name is assumed to have no salvage value after the 9 years. (Assume the cash flows occur at the end of each year.) Cash Flow Estimate $381,100 649,200 759,600 Probability Assessment Click here to view factor tables 20% 50% 30% (a) What is the estimated fair value of the trade name? Carla determines that the appropriate discount rate for this estimation is 9%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to O decimal places, e.g. 458,581.)
Headland Company owns a trade name that was purchased in an acquisition of McClellan Company. The trade name has a book value of $3,500,000, but according to GAAP, it is assessed for impairment on an annual basis. To perform this impairment test, Headland must estimate the fair value of the trade name. It has developed the following cash flow estimates related to the trade name based on internal information. Each cash flow estimate reflects Headland's estimate of annual cash flows over the next 9 years. The trade name is assumed to have no salvage value after the 9 years. (Assume the cash flows occur at the end of each year.) Cash Flow Estimate $380,600 646,900 768,300 Probability Assessment Click here to view factor tables. Estimated fair value $ LA 20% (a) What is the estimated fair value of the trade name? Headland determines that the appropriate discount rate for this estimation is 9%. (Round factor values to 5 decimal places, e.g. 1.25124 and final answer to 0 decimal places, e.g.…
On January 2, 2030, Esko Corp. acquired all the net assets of Tolits Inc. Esko Corp. paid P6,000,000 for the net assets of Tolits Inc. On this date, the following accounts of Tolits, Inc. are as follows: Cash – P150,000; Accounts Receivable – P1,600,000; Inventories – P600,000; Property, plant, and equipment – P2,600,000; Accounts Payable – P1,400,000. On the date of acquisition, it was determined that the fair values of inventories and property, plant, and equipment were P660,000 and P3,400,000, respectively. Esko Corp. has estimated a restructuring provision of P500,000 representing costs of exiting the activity of Tolits Inc., cost of terminating the employees of Tolits Inc. Compute the goodwill or gain from acquisition. * a. P 2,950,000 b. P 1,590,000 c. P 2,090,000 d. P 2,450,000 pls. answer it asap thank you:)
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