Impairment of Goodwill
Mesa Corporation purchased Kwick Company’s net assets and assigned goodwill of $80,000 to Reporting Division K. The following assets and liabilities are assigned to Reporting Division K:
| Carrying Amount | Fair Value |
Cash | $ 14,000 | $ 14,000 |
Inventory | 56,000 | 71,000 |
Equipment | 170,000 | 190,000 |
Goodwill | 80,000 |
|
Accounts Payable | 30,000 | 30,000 |
Required
Determine the amount of goodwill to be reported for Division K and the amount of goodwill impairment to be recognized, if any, if Division K’s fair value is determined to be
a. $340,000.
b. $280,000.
c. $260,000.
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