Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Consider the testing for impairment and the required journal entry for 12/31/X9. What is the impact of the journal entry on retained earnings? USE THE
Consider the testing for impairment and the required journal entry for 12/31/X9. What is the impact of the journal entry on retained earnings?
USE THE FOLLOWING INFORMATION FOR #14 - 15: Savannah Inc. purchased an identifiable business product as a unit and properly booked goodwill in association with the purchase. It was recently determined that one of the ingredients in the product is harmful to humans if taken on a regular basis. As a result the company is trying to determine if an impairment of the goodwill exists. The following information is available for two year end testing dates: 7/1/X5 $ 1,575,000 $ 404,000 Purchased Business product purchased for Goodwill capitalized in connection with purchase The company amortizes definite life intangibles using: - Straight line method - 7 years useful life Balance Sheet Dates/Testing Dates Fair Market Value of the business unit at testing date 12/31/X8 12/31/X9 902,000 $ 623,000 $ Cash Accounts Receivable Property, plant and equipment Inventory Goodwill Liabilities Net book Value Carrying Carrying Value Value at 12/31/X8 at 12/31/X9 $ 64,080 $ 86,400 $ 75,600 $ 72,000 $ 100,800 $ 113,400 $ 126,000 $ 41,400 $ 404,000 $ 404,000 $ (23,400) $ (32,400) S 747,080 $ 684,800Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started