Question

2.   In 2010, Alto, Inc., had acquired Rastiline Co. and recorded goodwill of $245 million as a result. The net assets (including goodwill) from Alto's acquisition of Rastiline Co. had a 2011 year-end book value of $580 million. Alto assessed the fair value of Rastiline at this date to be $700 million, while the fair value of all of Rastiline's identifiable tangible and intangible assets (excluding goodwill) was $550 million. The amount of the impairment loss that Alto would record for goodwill at the end of 2011 is

A. $95   B. $0.   C. $12 million.   D. $150 million. 4.   On January 1, 2018, Mites, Inc., acquired land for $6.2 million. Mites paid $1.2 in cash and signed a 6% note requiring the company to pay the remaining $5 million plus interest on December 31, 2019. An interest rate of 6% properly reflects the time value of money for this type of loan agreement. For what amount should Mites record the purchase of land?        A. $6.8 million   B. $6.2 million   C. $5.6 million   D. $5.0 million

Answer 1

2.

Option A... $95 millions

700 millions - (550+245)millions = loss of 95 millions

4.

$ 6.8 million

Explanation:

Value of land = Payment in cash + present value of notes payable

= $ 1.2 million + $ 5 million (1.06^2)

= $ 6.8 million.