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On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900...

On January 1, 20X1, Porta Corporation purchased Swick Company’s net assets and assigned goodwill of $80,900 to Reporting Division K. The following assets and liabilities are assigned to Reporting Division K on the acquisition date:

Carrying Amount Fair Value
Cash $ 14,900 $ 14,900
Inventory 56,900 71,900
Equipment 179,000 199,000
Goodwill 80,900
Accounts Payable 30,900 30,900


Required:
On December 31, 20X3, Porta must test goodwill for impairment. 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

  1. $349,000.
  2. $289,000.
  3. $269,000.
Amount of Goodwill Goodwill Impairment
a.
b.
c.

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Part a
Total Carrying Amount $300,800
Total Fair Value $254,900
Division K Fair Value $349,000
Goodwill will be reported $ 80,900
(Since Fair value of K $349,000 is more than Carrying amount of $300,800)
Impairment $           -  
(Since Fair value of K $349,000 is more than Carrying amount of $300,800)
Part b
Total Carrying Amount A $300,800
Total Fair Value B $254,900
Division K Fair Value C $289,000
Goodwill will be reported C-B $ 34,100
Impairment $80,900-$34,100 $ 46,800
Part c
Total Carrying Amount A $300,800
Total Fair Value B $254,900
Division K Fair Value C $269,000
Goodwill will be reported C-B $ 14,100
Impairment $80,900-$14,100 $ 66,800

ekkarill92 answered 1 year ago
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