Question

In 2016, Alliant Corporation acquired Centerpoint Inc. for $339 million, of which $59 million was allocated...

In 2016, Alliant Corporation acquired Centerpoint Inc. for $339 million, of which $59 million was allocated to goodwill. At the end of 2018, management has provided the following information for a required goodwill impairment test:

Fair value of Centerpoint, Inc. $ 247 million
Fair value of Centerpoint’s net assets (excluding goodwill) 221 million
Book value of Centerpoint’s net assets (including goodwill) 280 million


Required:
1. Determine the amount of the impairment loss.
2. Determine the amount of the impairment loss assuming that the fair value of Centerpoint is $306 million.

(For all requirements, Enter your answer in millions (i.e., 10,000,000 should be entered as 10)).

1. Impairment loss million
2. Impairment loss million
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Homework Answers

Answer #1
1.Impairment loss $33 million
2.Impairment loss $0 million

case 1:

first let us know the implied value of goodwill:

fair value of centerpoint inc $247 million
less:fair value of net assets (excluding goodwll) (221)million
implied value of good will $26 million

now,

book value of goodwill $59 million
less:implied value of good will (26 million)
impairment loss $33 million

case 2:

here, the fair value ($306million) is greater than book value ($280 million) ,so there is no impairment of good will.

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