Question

Assume the equity method Equity Investment account relating to a subsidiary has a reported balance of...

Assume the equity method Equity Investment account relating to a subsidiary has a reported balance of $9,036,000, including $864,000 of Goodwill. The fair value of the subsidiary is $8,100,000. The fair value of the subsidiary's individually identifiable net assets is $7,740,000. The subsidiary has only one reporting unit, which is the same as the overall entity.

For this fact set, determine whether Goodwill is impaired and, if so, the amount of impairment assuming the parent company has previously adopted FASB ASU 2017-04
Enter the impairment amount below. If goodwill in not impaired, enter zero.
$Answer

Prepare the required journal entry if you determine Goodwill is impaired.
If goodwill is not impaired, select "No entry" as your answers under Description and leave the Debit and Credit answers blank (zero).

Description Debit Credit
APICCommon StockDividendsEquity income from subsidiaryEquity investmentGoodwillOperating expensesRetained earningsNo entry
APICCommon StockDividendsEquity income from subsidiaryEquity investmentGoodwillOperating expensesRetained earningsNo entry
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Answer #1
Amount $
Fair value of the subsidiary        8,100,000
Less : Fair value of the subsidiary's individually identifiable net assets        7,740,000
Implied Goodwill          360,000
Amount $
Existing Goodwill          864,000
Less: Implied Goodwill          360,000
Goodwill Impairment          504,000
Description Debit $ Credit $
Equity income from subsidiary          504,000
Equity investment 504,000
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