Description
Option #1: Goodwill Impairment Test
Assume that the equity method Equity Investment account relating to a subsidiary has a reported balance of $6,250,000, including a carrying value of goodwill of $619,000. You currently value that subsidiary at $5,625,000, and estimate that the fair value of the subsidiary’s net assets, other than goodwill, is $5,375,000.
Submission Requirements:
Attach a PowerPoint presentation indicating:
- The steps required in assessing for goodwill impairment.
- The determination if the above scenario indicates that goodwill is impaired (showing all work).
- The required journal entries if indeed there is goodwill impairment.
- Review the grading rubric following this assignment, to understand how you will be graded on this assignment. Reach out to your instructor if you have questions about the assignment.
Explanation & Answer
Attached.
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Instructor
Course
Institution Affiliation
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Perform necessary assets adjustments at the
inception time. i.e. consider relevant costs to
an asset such as shipment and conveyance
costs.
Establish the book value of the underlying
asset
Obtain the goodwill i.e. Fair value less b...
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