1. Goodwill is tested for impairment using the 2 step impairment
test:
Test 1: Comparing the Carrying value of reporting unit (including
goodwill) with the Fair value of the reporting unit (including
goodwill)
Husker is the reporting unit of Blaha.
Carrying value of Husker (including goodwill) = $800,000
Fair value of Husker (including goodwill) = $720,000
Since carrying value exceeds the Fair value, the reporting unit may
be impaired.
Test 2: Comparing the Carrying value of goodwill with Implied
value of Goodwill.
Carrying value of Goodwill = $100,000
Implied value of Goodwill = FV of Husker (including goodwill) - FV
of Husker (excluding goodwill)
= $720,000 - $660,000 = $60,000.
Since, carrying value > implied value (100,000 > 60,000), the
reporting unit is impaired
Goodwill Impairment Loss = $100,000 - $60,000 = $40,000
Journal entry:
Impairment Loss account Dr. $40,000
To Goodwill Account $40,000
2. Under IFRS accounting, Impairment is calculated using one
step model at CGU level.
Carrying value is compared with the Recoverable Amount.
Carrying value = $800,000
Recoverable value shall be the Higher of Fair Value and the Value
in use = $740,000.
Since CV>FV , impairment exists.
Impairment loss = $800,000 - 740,000 = $60,000.
Journal entry to record impairment loss:
Impairment Loss Account Dr. $60,000
To Goodwill Account $60,000
LL LLLLLLLL B12-19 LO 12.5 SHOW ME HOW I Goodwill Several years ago, Blaha Company purchased...
Bridgeport Corporation purchased Johnson Company 3 years ago and at that time recorded goodwill of $310,000. The Johnson Division’s net assets, including the goodwill, have a carrying amount of $620,000. The fair value of the division is estimated to be $830,000. Prepare Bridgeport journal entry to record impairment of the goodwill.
Wember Company acquired a subsidiary company on December 31, 2012, and recorded the cost of the intangible assets it acquired as follows: Patent $100,000 Trade name 80,000 Goodwill 150,000 The patent is being amortized by the straight-line method over an expected life of 10 years with no residual value. Amortization has been recorded for the current year. The trade name was considered to have an indefinite life. Because of the success of the subsidiary in the past, Wember has not...
Concord Corporation purchased Skysong Company 3 years ago and at that time recorded goodwill of $460,000. The Skysong Division's net assets, including the goodwill, have a carrying amount of $920,000. The fair value of the division is estimated to be $1,130,000. Prepare Concords' journal entry, if necessary, to record impairment of the goodwill. (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...
Ayayai Corporation purchased Kingbird Company 3 years ago and at that time recorded goodwill of $300,000. The Kingbird Division’s net assets, including the goodwill, have a carrying amount of $650,000. The fair value of the division is estimated to be $590,000. Prepare Ayayais' journal entry, if necessary, to record impairment of the goodwill. (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...
Compute the amount of goodwill recognized, if any, on July 31,
2020.
Determine the impairment loss, if any, to be recorded on
December 31, 2020
Assume that fair value of the Conchita Division is $1,736,000
instead of $1,850,000. Determine the impairment loss, if any, to be
recorded on December 31, 2020.
Prepare the journal entry to record the impairment loss, if any,
and indicate where the loss would be reported in the income
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This loss will be reported in...
Required:
1. What is the amount of Apple’s accounts
receivable as of September 30, 2017?
2. Compute Apple’s accounts receivable turnover as
of September 30, 2017.
3. How long does it take, on average, for
the company to collect receivables for fiscal year ended September
30, 2017?
4. Apple’s most liquid assets include (a)
cash and cash equivalents, (b) short-term marketable
securities, (c) accounts receivable, and (d)
inventory. Compute the percentage that these liquid assets (in
total) make up of...