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In: Accounting

In 2019, Alliant Corporation acquired Centerpoint Inc. for $365 million, of which $65 million was allocated...

In 2019, Alliant Corporation acquired Centerpoint Inc. for $365 million, of which $65 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. $ 265 million
Book value of Centerpoint’s net assets (excluding goodwill) 235 million
Book value of Centerpoint’s net assets (including goodwill) 300 million

1. Determine the amount of the impairment loss. (Negative amount should be indicated by a minus sign. Enter your answer in millions (i.e., 10,000,000 should be entered as 10)).

2. Determine the amount of the impairment loss assuming that the fair value of Centerpoint is $330 million. (Enter your answer in millions (i.e., 10,000,000 should be entered as 10)).

Solutions

Expert Solution

1)
Implied Value of Goodwill Amount($)
(Million)
Fair Value Of Centerpoint Inc.                         265
Less: Book Value Centerpoint Inc. Excluding Goodwill                         235
Implied Value of Goodwill                           30
Impairment Of Goodwill
Book value                           65
Less: Implied Value                           30
Impairment Of Goodwill                           35
2)The book value of net assets (including goodwill) is $300 million and the fair value is given to be $330 million, the fair value exceeds the book value, therefore there is no impairment loss.

ekkarill92 answered 1 year ago
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