Your answer is partially correct. As a new intern for the local branch office of a national brokerage firm, you are excited to get an assignment that allows you to use your accounting expertise. Your supervisor provides you with the spreadsheet below, which contains data for the most recent quarter for three companies that the firm has been recommending to its clients as "buys." Each of the companies' returns on assets has outperformed their industry cohorts in the past. But, given recent challenges in their markets, there is concern that the companies may experience operating challenges and lower earnings. (All numbers in millions, except return on assets.) Company Sprint Nextel Washington Mutual E* Trade Financial Fair Value of Company $36,351 11.582 1,628 Goodwill Account Titles and Explanation Loss on Impairment Book Value (Net Assets Including Goodwill) $51,201 23.941 4,024 Carrying Value of Goodwill $30,618 9,052 2,015 Return on Assets (c) Estimate the amount of goodwill impairment for each company and indicate how to record the impairment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry) 3.1% 2.6% 6.0% Debit Credit 00
Your answer is partially correct. As a new intern for the local branch office of a national brokerage firm, you are excited to get an assignment that allows you to use your accounting expertise. Your supervisor provides you with the spreadsheet below, which contains data for the most recent quarter for three companies that the firm has been recommending to its clients as "buys." Each of the companies' returns on assets has outperformed their industry cohorts in the past. But, given recent challenges in their markets, there is concern that the companies may experience operating challenges and lower earnings. (All numbers in millions, except return on assets.) Company Sprint Nextel Washington Mutual E* Trade Financial Fair Value of Company $36,351 11.582 1,628 Goodwill Account Titles and Explanation Loss on Impairment Book Value (Net Assets Including Goodwill) $51,201 23.941 4,024 Carrying Value of Goodwill $30,618 9,052 2,015 Return on Assets (c) Estimate the amount of goodwill impairment for each company and indicate how to record the impairment. (Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry before credit entry) 3.1% 2.6% 6.0% Debit Credit 00
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Your answer is partially correct.
As a new intern for the local branch office of a national brokerage firm, you are excited to get an assignment that allows you to use your
accounting expertise. Your supervisor provides you with the spreadsheet below, which contains data for the most recent quarter for
three companies that the firm has been recommending to its clients as "buys." Each of the companies' returns on assets has
outperformed their industry cohorts in the past. But, given recent challenges in their markets, there is concern that the companies may
experience operating challenges and lower earnings. (All numbers in millions, except return on assets.)
Company
Sprint Nextel
Washington Mutual
E* Trade Financial
Fair
Value of
Company
$36,351
11,582
Loss on Impairment
Account Titles and Explanation
Goodwill
1,628
eTextbook and Medial
Book Value
(Net Assets
Including
Goodwill)
$51,201
23,941
4,024
Carrying
Value of
Goodwill
$30,618
9,052
2,015
(c) Estimate the amount of goodwill impairment for each company and indicate how to record the impairment. (Credit account titles are
automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and
enter o for the amounts. List debit entry before credit entry)
Return on
Assets
3.1%
2.6%
6.0%
Debit
Credit
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