Green River Company acquired 100% of the voting stock of the Auto Style Group on January 1 of the current year for a total acquisition cost of $ 250,000. The trial balance of Auto Style on the date of acquisition is presented below.

The Auto Style Group acquired the intangible assets three years ago. It amortizes the assets using the straight- line method with no estimated residual value. The appraisal of the subsidiary€™s net assets on the date of acquisition indicated that the following adjustments were required:

On December 31 (one year after the acquisition), Green River€™s management conducted its annual impairment test for goodwill. Management has also assessed recent events and determined that it should review its plant and equipment and finite- life intangible assets for possible impairment. Management determines Auto Style to be the reporting unit, which is also the cash- generating unit. Management estimated that the fair value of the unit (Auto Style) with goodwill one year after the acquisition was $ 300,000; its value in use was $ 310,000; and the costs to sell were $ 20,000. The net assets of the unit, excluding goodwill, were appraised at $ 294,000. Assume that annual depreciation is $ 5,000, annual amortization for the customer list is $ 1,000, and the annual amortization for the other intangible assets is $ 3,500. Green River uses separate accounts for accumulated depreciation and accumulated amortization. Treat the customer list as a finite- life intangible asset. Management is unable to determine fair values for the reporting unit€™s assets, but it estimates the following future cash flows for each of the unit€™s assets, with the exception of goodwill. Assume that Green River€™s cost of capital is 5%.

Required
a. Compute the amount of goodwill to be recorded on the date of acquisition.
b. Conduct the impairment test for goodwill at the end of the year, one year after the acquisition. Assume no changes in the reporting unit€™s assets and liabilities except for depreciation and amortization.
c. Conduct the impairment tests indicated for assets other than goodwill at the end of the year, one year after the acquisition.
d. Prepare the journal entries required to record any impairment losses computed in parts (b) and (c).

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Debit Credit Description Investment securities- Held to matty S 30.000 Plant and equipment-net Intangible assets-net Long-tem debt Contributed capital Retained earnings 195,000 70.000 $115.000 60,000 120,000 $295,000 $295,000 Totals Description Plant and equipment-net Customer list Long-term debt Book Value i Value Adjustment $195,000 $210,000 $15,000 50,000 (115.000 (120000 5000 $140,000 50,000 Total Net Assets S 80,000 $60,000 Plant and Equipment Intangible Assets List Customer $11,000 $126.000 $54,000