Question

On May 28, 2018, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc.,...

On May 28, 2018, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $550 million. The fair value of Harman's identifiable tangible and intangible assets totaled $603 million, and the fair value of liabilities assumed by Pesky was $177 million.

Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2018. Management has provided the following information:

Fair value of Harman, Inc. $ 530 million
Fair value of Harman's net assets (excluding goodwill) 470 million
Book value of Harman's net assets (including goodwill) 546 million


Required:
1. Determine the amount of goodwill that resulted from the Harman acquisition.
2. Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2018, if any.
3. If an impairment loss is required, prepare the journal entry to record the loss.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

1 ) goodwill resulted from the harman acquisition  

total consideration = 550 millions

less ; fair value of net assets = 603

less ; liabilites assumed = 177 = 426 millions

124 millions

total goodwill = 124 millions

2 ) amount of goodwill impairment loss that pesky should recognize at the end of 2018

determination of implied goodwill

fair value of harman , inc = 530 millions

fair value of harman net assets = 470 millions

implied value of good will = 60 million

calculation of impairment loss

book value of good will = 124 million

implied value of goodwill = 60 million

impairment loss = 64 million

3 ) entry to record impairement loss

loss on impairment of goodwill 64 million

to good will 64 million

( to record impairment loss )

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
On May 28, 2018, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc.,...
On May 28, 2018, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $580 million. The fair value of Harman's identifiable tangible and intangible assets totaled $624 million, and the fair value of liabilities assumed by Pesky was $166 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2018. Management has provided the following information: Fair value of Harman, Inc. $ 560 million Fair value of Harman's net...
On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc.,...
On May 28, 2021, Pesky Corporation acquired all of the outstanding common stock of Harman, Inc., for $450 million. The fair value of Harman's identifiable tangible and intangible assets totaled $533 million, and the fair value of liabilities assumed by Pesky was $170 million. Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2021. Management has provided the following information: Fair value of Harman, Inc. $ 430 million Fair value of Harman's net...
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...
In 2019, Alliant Corporation acquired Centerpoint Inc. for $506 million, of which $86 million was allocated...
In 2019, Alliant Corporation acquired Centerpoint Inc. for $506 million, of which $86 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. $ 378 million Book value of Centerpoint’s net assets (excluding goodwill) 334 million Book value of Centerpoint’s net assets (including goodwill) 420 million Alliant prepares its financial statements according to IFRS, and Centerpoint is considered a cash-generating unit. Assume that...
In 2018, Parent Corp. acquired Sub, Inc. and recorded goodwill of $110 million. Parent considers Sub...
In 2018, Parent Corp. acquired Sub, Inc. and recorded goodwill of $110 million. Parent considers Sub a separate reporting unit. By the end of 2021, the net assets (including goodwill) of Sub are $330 million and its estimated fair value is $279 million. The amount of the impairment loss that Parent would record for goodwill at the end of 2021 is: Multiple Choice $0. $51 million. $169 million. $59 million.
Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $13,040,000 in cash....
Johnson Corporation acquired all of the outstanding common stock of Smith Corporation for $13,040,000 in cash. The book value of Smith’s net assets (assets minus liabilities) was $9,500,000. The fair values of all of Smith’s assets and liabilities were equal to their book values with the following exceptions: Book Value Fair Value Receivables $ 3,000,000 $ 2,630,000 Property, plant, and equipment 9,700,000 11,270,000 Intangible assets 370,000 1,540,000 Required: Calculate the amount paid for goodwill.   
On July 31, 2017, Sandhill Company paid $2,700,000 to acquire all of the common stock of...
On July 31, 2017, Sandhill Company paid $2,700,000 to acquire all of the common stock of Conchita Incorporated, which became a division of Sandhill. Conchita reported the following balance sheet at the time of the acquisition. Current assets $840,000 Current liabilities $570,000 Noncurrent assets 2,400,000 Long-term liabilities 470,000 Total assets $3,240,000 Stockholders’ equity 2,200,000 Total liabilities and stockholders’ equity $3,240,000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita...
Alomar Co., a consolidated enterprise, conducted an impairment review for each of its reporting units. In...
Alomar Co., a consolidated enterprise, conducted an impairment review for each of its reporting units. In its qualitative assessment, one particular reporting unit, Sellers, emerged as a candidate for possible goodwill impairment. Sellers has recognized net assets of $1,220, including goodwill of $725. Seller’s fair value is assessed at $1,124 and includes two internally developed unrecognized intangible assets (a patent and a customer list with fair values of $274 and $79, respectively). The following table summarizes current financial information for...
Mam Ltd acquired Bo Ltd on 1 July 2018 for cash of $7 000 000. At...
Mam Ltd acquired Bo Ltd on 1 July 2018 for cash of $7 000 000. At that date, Bo Ltd’s net identifiable assets had a fair value of $5 800 000. The fair value of the net identifiable assets of Bo Ltd are determined as follows: (in $000) Customer List 50 Machinery 1450 Buildings 1500 Land 3000 6000 Less: Bank Loan 200 Net assets 5800 At the end of the reporting period of 30 June 2019, the management of Mam...
Please explain the results for the Patent and Customer list are zero? Problem 3-17 (Algo) (LO...
Please explain the results for the Patent and Customer list are zero? Problem 3-17 (Algo) (LO 3-6) Alomar Co., a consolidated enterprise, conducted an impairment review for each of its reporting units. In its qualitative assessment, one particular reporting unit, Sellers, emerged as a candidate for possible goodwill impairment. Sellers had recognized net assets with carrying amounts totaling $1,124, including goodwill of $610. Seller’s reporting unit fair value is assessed at $1,038 and includes two internally developed unrecognized intangible assets...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT