AM Enterprises acquired 100 percent of stock for ZD Corporation with goodwill valued at $2 million. The company adopted a new policy to test for goodwill impairment for all its reporting units on an annual basis. Additionally, multiple fixed asset groupings within AM experienced a significant decline in market value and need to be tested for impairment. Along with the records needed, the company also got an appraisal and ZD corp was found to have a fair value of $11,339,000 as of 12/31/2019.

Property, Plant, & Equipment, net, is reported at historical cost less accumulated depreciation (i.e., $15,000,000 for ZD) on the preliminary 2019 Balance Sheet Summary. The tables in Appendix B contain information Roberts has compiled for fixed asset impairment testing.

Current Assets on the preliminary 2019 Balance Sheet Summary includes inventory reported with the last-in-first-out(LIFO) approach, using the dollar-value LIFO method applied to a single inventory cost pool. Relevant information for these cost pools compiled for the analysis of inventory valuation is presented in Appendix C.

ZDs Bonds Payable consists of a single issuance of 8,000 bonds, each with a face value of $1,000 and a maturity date of12/31/2024. The bonds have a coupon rate of 6 percent (payable annually) and were issued at face value. At 12/31/19, the prevailing market rate was 5 percent. Hopes Bonds Payable includes a single issuance of 6,200 bonds, each with a face value of $1,000 and a maturity date of 12/31/2023. The bonds have a coupon rate of 4 percent (payable annually) and were issued at face value. At 12/31/19, the prevailing market rate was 5 percent.

Question: Assume AM will be an early adopter of ASU 2017-94 as of 12/15/2019. Using ASC guidelines determine the goodwill valuation for ZD Corporation. Provide numbers to support your revaluation if necessary and explain your process.

Property, Plant, and Equipment Information ZD Corporation Asset Groupinga Book Value Fair Market Value Sum of Undiscounted Future Cash Flows 1 2 3 4 5 6 7 8 9 10 1,250,000 3,400,000 960,000 1,080,000 3,800,000 1,600,000 440,000 820,000 750,000 900,000 800,000 3,600,000 850,000 900,000 3,850,000 1,750,000 300,000 600,000 860,000 1,075,000 14,585,000 1,500,000 4,200,000 900,000 1,200,000 3,900,000 2,000,000 400,000 1,000,000 980,000 1,200,000 17,280,000 15,000,000 APPENDIX C Inventory Information Net Net Realizable Dollar-Value Replacement Realizable Value Less Normal LIFO Cost Cost Value Profit Margin 5,000,000 4,100,000 6,000,000 4,800,000 ZD Corporation Balance Sheet Summary December 31, 2019 25,000,000 15,000,000 40,000,000 Assets Current Assets Property, Plant, & Equipment, net Total Assets Liabilities Current Liabilities Bonds Payable (maturity date-12/31/2024) Total Liabilities Stockholders' Equity Common Stock/Additional Paid-In-Capital Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 21,000,000 8,000,000 29,000,000 8,000,000 3,000,000 11,000,000 40,000,000 Property, Plant, and Equipment Information ZD Corporation Asset Groupinga Book Value Fair Market Value Sum of Undiscounted Future Cash Flows 1 2 3 4 5 6 7 8 9 10 1,250,000 3,400,000 960,000 1,080,000 3,800,000 1,600,000 440,000 820,000 750,000 900,000 800,000 3,600,000 850,000 900,000 3,850,000 1,750,000 300,000 600,000 860,000 1,075,000 14,585,000 1,500,000 4,200,000 900,000 1,200,000 3,900,000 2,000,000 400,000 1,000,000 980,000 1,200,000 17,280,000 15,000,000 APPENDIX C Inventory Information Net Net Realizable Dollar-Value Replacement Realizable Value Less Normal LIFO Cost Cost Value Profit Margin 5,000,000 4,100,000 6,000,000 4,800,000 ZD Corporation Balance Sheet Summary December 31, 2019 25,000,000 15,000,000 40,000,000 Assets Current Assets Property, Plant, & Equipment, net Total Assets Liabilities Current Liabilities Bonds Payable (maturity date-12/31/2024) Total Liabilities Stockholders' Equity Common Stock/Additional Paid-In-Capital Retained Earnings Total Stockholders' Equity Total Liabilities and Stockholders' Equity 21,000,000 8,000,000 29,000,000 8,000,000 3,000,000 11,000,000 40,000,000