Question

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The fair values of assets and liabilities held by three reporting units and other Information related to the reporting units owned by Prover Company are as follows: Cash & Receivables Inventory Land Buildings Equipment Accounts Payable Fair Value of Reporting Unit Carrying Value of Investment Goodwill Included in Carrying Value Reporting Unit А $ 36,00 $ 96,200 $ 24, 200 72,600 121,000 48,400 24,200 36,609 12,400 124, 229 186,00 99, 200 173,600 111,600 62,00 49,600 74,400 12,400 496,09 545, 602 328,600 520,809 620,000 359,609 86,809 68,600 49,689 Required: a. Determine the amount, if any, that Prover should report as a goodwill Impairment for the current period. b. Determine the amount of goodwill that Prover should report in its current financial statements.

Answer 1

Solution:-

Cash & Receivables	36,000	96,200	24,200
Inventory	72,600	121,000	48,400
Land	24,200	36,600	12,400
Buildings	124,000	186,000	99,200
Equipment	173,600	111,600	62,000
Accounts payable	-49,600	-74,400	-12,400
Net Assets	380,800	477,000	233,800
Goodwill	86,800	68,600	49,600
Total	467,600	545,600	283,400
Less FV	496,000	545,600	328,600
Reduction (Increase) in goodwill	-28,400	0	-45,200
Goodwill on Books	86,800	68,600	49,600
Reduction (Increase) in goodwill	-28,400	0	-45,200
Implied Goodwill	58,400	68,600	4,400

	Unit A	Unit B	Unit C	Total
Goodwill included in Carrying Value	86,800	68,600	49,600
Implied goodwill at year end	58,400	68,600	4,400
Goodwill to be reported at year end	58,400	68,600	4,400	131,400