On January 1, 2010, Porsche Company acquired the net assets of Saab Company for $450,000 cash. The
Question:
On January 1, 2010, Porsche Company acquired the net assets of Saab Company for $450,000 cash. The fair value of Saab’s identifiable net assets was $375,000 on this date. Porsche Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit (Saab). The information for these subsequent years is as follows:
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Required:
Part A: For each year determine the amount of goodwill impairment, if any.
Part B: Prepare the journal entries needed each year to record the goodwill impairment (if any) on Porsche’s books from 2011 to 2013.
Part C: How should goodwill (and its impairment) be presented on the balance sheet and the income statement in each year?
Part D: If goodwill is impaired, what additional information needs to bedisclosed?
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Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
Step by Step Answer:
Part A 20 11 Step 1 Fair value of the reporting unit 400000 Carrying value of unit Carrying value of identifiable net assets 330000 Carrying value of ...View the full answer
