In 2011, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to

Question:

In 2011, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to goodwill. At the end of 2013, management has provided the following information for a required goodwill impairment test:

Fair value of Centerpoint, Inc. ..............$220 million

Fair value of Centerpoint’s net assets (excluding goodwill) .... 200 million

Book value of Centerpoint’s net assets (including goodwill) ... 250 million

Required:

1. Determine the amount of the impairment loss.

2. Repeat requirement 1 assuming that the fair value of Centerpoint is $270 million.

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