Question

On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $450 million. The fair value of Harman's identifiable tangible and intangible assets totaled $533 million, and the fair value of liabilities assumed by Pesky was $170 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information: Fair value of Harman, Inc. Fair value of Harman's net assets (excluding goodwill) Book value of Harman's net assets (including goodwill) $430 million 370 million 446 million Required: 1. Determine the amount of goodwill that resulted from the Harman acquisition. 2. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2021. if any. 3. If an impairment loss is required, prepare the journal entry to record the loss.

Answer 1

llion © Computation of the amount of goodwill. Consideration exchanged = $ 450 million hess: Faire value of ned assets ; Assets £ 533 million less: Liabilefies assumed $(170) million. $6243.) me Goodlucill $ 87 million Cans) 2 Because of the book value of the ned assets 9 446 million) exceeds faire value (f 430 million) . an impairment loss iš indicated. Determination of implied goodwill: fain value of Harmein Inc. $ 430 million Fair value of Harman's net cassets. (ezclucling goodeerill) := '$ 370 million $ 60 million Measurement of impairement loss i.. Book Value of good well : $87 million Implied value of goodwill - $ 60 million Impairmend loss a7 million Cans) Answers; Goodwill $ 87_million Goodwill Impoinment loss 1 & 22 million

☺ If an impairment loss is requcned ; entry to record the impaiámend loss : Event General Journal Debil de Loss on impairmend of gooduele pay - Goodwall: -. $ 27.