In 2019, Alliant Corporation acquired Centerpoint Inc. for $520 million, of which $90 million was allocated...
In 2019, Alliant Corporation acquired Centerpoint Inc. for $520 million, of which $90 million was allocated to goodwill. At the end of 2021, management has provided the following information for a required goodwill impairment test:
| Fair Value of Centerpoint Inc. | $386 million | |
| Book Value of Centerpont's net assets (excluiding goodwill) | $340 million | |
| Book Value of Centerpoint's net assets (including goodwill) | $430 million |
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Item 13 Part 1 of 2 1.66 points
Required information
[The following information applies to the questions
displayed below.]
In 2019, Alliant Corporation acquired Centerpoint Inc. for $520
million, of which $90 million was allocated to goodwill. At the end
of 2021, management has provided the following information for a
required goodwill impairment test:
| Fair value of Centerpoint Inc. | $ | 386 | million |
| Book value of Centerpoint’s net assets (excluding goodwill) | 340 | million | |
| Book value of Centerpoint’s net assets (including goodwill) | 430 | million | |
Required:
1. Determine the amount of the impairment
loss.
2. Determine the amount of the impairment loss assuming that the fair value of Centerpoint is $476 million
Homework Answers
Part 1
|
Impairment loss |
$44 million |
|
Determination of implied fair value of goodwill: |
|
|
Fair value of Centerpoint, Inc. |
$386 million |
|
Fair value of Centerpoint’s net assets (excluding goodwill) |
340 million |
|
Implied fair value of goodwill |
$46 million |
|
Measurement of impairment loss: |
|
|
Book value of goodwill |
$90 million |
|
Implied fair value of goodwill |
46 million |
|
Impairment loss |
$44 million |
Part 2
|
Impairment loss |
$0 million |
fair value of the reporting unit, $476 million > book value,$430 million
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