12:571 LTE File Details ACC-4023-201-202220 Advanced ACC (Summer 2... ACC 4023 Goodwill Assessment Problem Vers. A (10 points) On July 31, 2020, Zombie Company (Zombie) paid $3,000,000 to acquire all of the common stock of Deadwood Company (Deadwood), which became a division (a reporting unit) of Zombie. Deadwood reported the following balance sheet at the time of acquisition: Current assets Noncurrent assets 2.700.000 $800,000 Current liabilities $600,000 Long-term liabilities 500,000 Total assets $3,500,000 Stockholders' equity 2.400.000 Total liabilities & stockholders' equity $3.500.000 It was determined at the date of the purchase that the fair value of the identifiable net assets of Deadwood was $2,750,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2020, Zombie's bookkeeper provides the following net asset information regarding Deadwood: Current assets Noncurrent assets (including goodwill and fair values recognized on purchase by Zombie) Current liabilities Long-term liabilities Net assets $450,000 2,400,000 (700,000) (500,000) $1.650.000 Finally, it is determined that the fair value of the Deadwood Division is $1,850,000 (includes goodwill) at December 31, 2020. Required: a) Compute the amount of goodwill recognized, if any, on July 31, 2020. (2 points) b) Determine the goodwill impairment loss, if any, to be recorded on December 31, 2020 assuming no other assets of Deadwood indicate impairment. (3 points) c) i. Assume that the fair value of the Deadwood Division is $1,600,000 instead of $1,850,000. Determine the goodwill impairment loss, if any, to be recorded on December 31, 2020 assuming no other assets of Deadwood indicate impairment. (3 Previous Next Dashboard Calendar To Do Notifications Inbox