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a.
To identify: The amount of
Introduction: Goodwill impairment is computed in case fair value of reporting unit is lower than carrying value of net identifiable assets. Goodwill in case of impairment is computed by deducting fair value of net assets excluding goodwill from the fair value of reporting unit.
b.
To identify: The amount of goodwill or goodwill impairment to be recognized.
Introduction: Goodwill impairment is computed in case fair value of reporting unit is lower than carrying value of net identifiable assets. Goodwill in case of impairment is computed by deducting fair value of net assets excluding goodwill from the fair value of reporting unit.
c.
To identify: The amount of goodwill or goodwill impairment to be recognized.
Introduction: Goodwill impairment is computed in case fair value of reporting unit is lower than carrying value of net identifiable assets. Goodwill in case of impairment is computed by deducting fair value of net assets excluding goodwill from the fair value of reporting unit.
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Chapter 1 Solutions
Advanced Financial Accounting
- Topic: Intangible Assets (Goodwill) England Company assembled the following data relative to a certain entity in determining the amount to be paid for net assets and goodwill: Assets at fair value before goodwill 2,600,000 Liabilities 900,000 Shareholders' Equity 1,700,000 Net Earnings after elimination of unusual or infrequent items: 2017 200,000 2018 230,000 2019 300,000 2020 250,000 2021 270,000 Required: Calculate the amount of goodwill under the following: 1. Average earnings are capitalized at 10%. 2. A return of 8% is considered normal on net assets at fair value. Excess earnings are capitalized at 15%. 3. A return of 10% is considered normal on net assets at fair value. Goodwill is measured at 5 years excess earnings. 4. A return of 10% is considered…arrow_forward1arrow_forwardA-7arrow_forward
- On 1/1/2020 Company A acquired the net assets of Company B for a price of 296,000 JD, the fair value of net assets of company B is 180,000 JD. On 1/1/2021 the fair value of unit is 560,000 JD carrying value of net assets (excluding goodwill) 480,000 JD fair value of net assets 460,000 JD. Compute impairment loss. Select one: а. 12000 O b. 14000 O c. 16000 O d. 18000arrow_forwarddetermine the goodwill impairment Net book value of Devon 3,600,000 Goodwill included in net book value 1,400,000 Fair value of Devon 2,800,000 Fair value of Devon's identifiable net assets, excluding goodwill 5,200,000arrow_forward1arrow_forward
- Case 5. The assets of a CGU at year-end are as follows: Property, Plant and Equipment Patent Goodwill Carrying amount 2,500,000 3,500,000 1,000,000 Fair value 2,000,000 3,000,000 1,000,000 The most recent review assesses the value in use of the CGU to be 4,500,000. 24. What total amount should be reported as impairment loss on goodwill? 25. What is the impairment loss to be allocated to the PPE?arrow_forwardRequired: 1. Calculate the impairment loss of goodwill (if any). 2. Record the appropriate journal entry.arrow_forwardPurchase Company recently acquired several businesses and recognized goodwill in each acquisition. Purchase has allocated the resulting goodwill to its three reporting units: RU-1, RU-2, and RU-3. Purchase opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually. In its current-year assessment of goodwill, Purchase provides the following individual asset and liability carrying amounts for each of its reporting units: Carrying Amounts RU-1 RU-2 RU-3 Tangible assets $224,000 $288,000 $202,000 Trademark 198,000 Customer list 116,250 Unpatented technology 175,000 Licenses 137,500 Copyrights 52,000 Goodwill 164,800 232,050 91,500 Liabilities (43,000) The total fair values for each reporting unit (including goodwill) are $645,450 for RU-1, $790,400 for RU-2, and $671,850 for RU-3. To date, Purchase has reported no goodwill impairments. How much goodwill impairment should…arrow_forward
- Purchase Company recently acquired several businesses and recognized goodwill in each acquisition. Purchase has allocated the resulting goodwill to its three reporting units: RU-1, RU-2, and RU-3. Purchase opts to skip the qualitative assessment and therefore performs a quantitative goodwill impairment review annually. In its current-year assessment of goodwill, Purchase provides the following individual asset and liability carrying amounts for each of its reporting units: Carrying Amounts RU-1 RU-2 RU-3 Tangible assets $214,000 $295,000 $207,750 Trademark 192,000 Customer list 110,250 Unpatented technology 183,000 Licenses 94,000 Copyrights 67,500 Goodwill 173,200 201,250 135,000 Liabilities (51,250) The total fair values for each reporting unit (including goodwill) are $613,000 for RU-1, $748,800 for RU-2, and $739,200 for RU-3. To date, Purchase has reported no goodwill impairments. How much goodwill impairment should…arrow_forwardAccounting Answer asap Group Ccc-Three Ltd has identified its non-current assets consist of three classes: goodwill, land and plant. Details of items included in each class appear below. Goodwill Total goodwill is $580,000 and no impairments have previously been recorded. $300,000 of this total relates to the purchase of Company F on 1 February 2020. The estimated fair value of this goodwill at 30 June 2021 is $350,000. The remaining $280,000 of the total goodwill relates to the purchase of Company G on 1 January 2021. The estimated recoverable amount of this goodwill at 30 June 2021 is $250,000. Land The land was acquired on 1 June 2016 for $2,100,000. The estimated market value of the land at 30 June 2021 is $2,600,000. However, if the land was sold, disposal costs of $90,000 would be incurred. Plant The plant was originally acquired for $270,000 on 1 September 2017. When purchased, the plant was considered to have a nil residual value and a 10-year useful life for both accounting…arrow_forwardplease dont give image based answers thank youarrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
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