Question

The following information is available for Minneapolis Mill’s Canned Vegetable Division, as of the balance sheet...

  1. The following information is available for Minneapolis Mill’s Canned Vegetable Division, as of the balance sheet reporting date of March 31, 2019:

Carrying value of the division, without Goodwill                       $2,440,000

Goodwill of the Canned Vegetable Division                                2,000,000

Total carrying value of the division                                             $4,440,000

Minneapolis Mills no longer plans to invest in maintaining this division and expects to complete a sale of the division in three years. Estimated cash flows for the Canned Vegetable Division are as follows:

Year ending 3/31/2020                                                                 400,000

Year ending 3/31/2021                                                                 200,000

Year ending 3/31/2022, including sale price                               1,500,000

The appropriate discount rate is 8%.

What is the amount of the impairment to Goodwill (if any)?

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