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
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Goodwill Impairment Test
Name
Institution Affiliate
1)
I agree that a performance test should be performed for potential impairment.
This test acts as a performance value and exceeds the fair value.
Performance test will determine the speed, responsiveness and stability of the
company.
There are very significant reasons why a perfor...