On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,080 cash. The fair value of Saab’s identifiable net assets was $374,890 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:
For each year determine the amount of goodwill impairment, if
any.
Homework Answers
| Goodwill impairment: | ||||||
| 2014 | ||||||
| $ | ||||||
| Present value of future cash flows (Fair value) | A | 400540 | ||||
| Carrying value of unit: | ||||||
| Carrying value of identifiable net assets | 329922 | |||||
| Carrying value of goodwill | (Note:1) | 75190 | ||||
| Total carrying value of unit | B | 405112 | ||||
| Excess of carrying value over fair value | B-A | 4572 | ||||
| Since carrying value > Fair value,There is impairment | ||||||
| Impairment loss: | ||||||
| $ | ||||||
| Present value of future cash flows (Fair value) | 400540 | |||||
| Less: fair value of identifiable net assets | 340616 | |||||
| Implied value of goodwill | A | 59924 | ||||
| Carrying value of goodwill | B | (Note:1) | 75190 | |||
| Impairment loss | B-A | 15266 | ||||
| Note:1- Carrying value of goodwill (Goodwill on the date of acquisition) | ||||||
| $ | ||||||
| Acquisition price | 450080 | |||||
| Less: fair value of identifiable net assets | 374890 | |||||
| Goodwill | 75190 | |||||
| 2015 | ||||||
| $ | ||||||
| Present value of future cash flows (Fair value) | A | 400360 | ||||
| Carrying value of unit: | ||||||
| Carrying value of identifiable net assets | 320530 | |||||
| Carrying value of goodwill | (Note:2) | 59924 | ||||
| Total carrying value of unit | B | 380454 | ||||
| Excess of carrying value over fair value | B-A | -19906 | ||||
| Since carrying value < Fair value,There is no impairment | ||||||
| Note:2 | ||||||
| Carrying value of goodwill=Beginning carrying value-Impairment loss=75190-15266=$ 59924 | ||||||
| 2016 | ||||||
| $ | ||||||
| Present value of future cash flows (Fair value) | A | 349520 | ||||
| Carrying value of unit: | ||||||
| Carrying value of identifiable net assets | 299430 | |||||
| Carrying value of goodwill | 59924 | |||||
| Total carrying value of unit | B | 359354 | ||||
| Excess of carrying value over fair value | B-A | 9834 | ||||
| Since carrying value > Fair value,There is impairment | ||||||
| Impairment loss: | ||||||
| $ | ||||||
| Present value of future cash flows (Fair value) | 349520 | |||||
| Less: fair value of identifiable net assets | 324660 | |||||
| Implied value of goodwill | A | 24860 | ||||
| Carrying value of goodwill | B | (Note:1) | 59924 | |||
| Impairment loss | B-A | 35064 | ||||
Add Answer to:
On January 1, 2013, Porsche Company acquired the net assets of
Saab Company for $450,080 cash....
On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,080 cash....
On January 1, 2013, Porsche Company
acquired the net assets of Saab Company for $450,080 cash. The fair
value of Saab’s identifiable net assets was $374,890 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: For each year determine the amount of goodwill
impairment, if any. Please show work
Exercise 2-10 On...
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On January 1, 2013, Porsche Company acquired the net assets of Saab
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net assets was $375,570 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:
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of Future Cash Flows
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Net Assets*
Fair...
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On January 1, 2013, Porsche Company acquired the net assets of Saab
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net assets was $375,570 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:
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of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
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On January 1, 2013, Porsche Company
acquired the net assets of Saab Company for $450,080 cash. The fair
value of Saab’s identifiable net assets was $374,890 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: For each year determine the amount of goodwill
impairment, if any. Please show work
Exercise 2-10 On...
On January 1, 2013, Porsche Company acquired the net assets of Saab Company for $450,420 cash. The fair value of Saab's Identifiable net assets was $374,640 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 2014 2015 2016 Present Value of Future Cash Flows $400,600 $400,450 $350,410 Carrying Value of Saab's...
Exercise 2-10
On January 1, 2013, Porsche Company acquired the net assets of Saab
Company for $449,660 cash. The fair value of Saab’s identifiable
net assets was $375,570 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 Value
of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
Exercise 2-10
On January 1, 2013, Porsche Company acquired the net assets of Saab
Company for $449,660 cash. The fair value of Saab’s identifiable
net assets was $375,570 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 Value
of Future Cash Flows
Carrying Value of
Saab’s Identifiable
Net Assets*
Fair...
For each year determine the
amount of goodwill impairment, if any.
On January 1, 2013, Porsche Company acquired 100% of Saab Company's stock for $451,730 cash. The fair value of Saab's identifiable net assets was $376,340 on this date. Porsche Company decided to measure goodwill ble prices of similar businesses to estimate the fair value of the reporting unit (Saab). The information for these subsequent years is as follows: Year 2014 2015 2016 Present Value of Future Cash Flows $400,630...
1) After doing goodwill impairment test in year 2019,
the carrying value including goodwill of S Co. was: *
a) $1,401,000
b) $1,403,000
c) $1,400,000
d) $1,402,000
2) After doing goodwill impairment test in year 2018, the result
was: *
a) Impairment loss of $13,000
b) No Impariment loss
c) Impairment loss of $12,000
d) Impairment loss of $10,000
On January 1, 2018, P Company acquired the net assets of S Company for $1,600,000 cash. The fair value of S...
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