Question
Grand Champion Inc. purchased Americas Sweethearts Corporation on January 1, 2019. At the time, Americas Sweethearts had the following assets and liabilities (stated at fair
Grand Champion Inc. purchased Americas Sweethearts Corporation on January 1, 2019. At the time, Americas Sweethearts had the following assets and liabilities (stated at fair value):
Cash | $62,000 |
Accounts receivable | 138,000 |
Inventory | 185,000 |
Property, plant, and equipment | 300,000 |
Patent | 65,000 |
Accounts payable | 200,000 |
Notes payable | 325,000 |
Grand Champion paid $900,000 for Americas Sweethearts. Assume that Americas Sweethearts is a reporting unit of Grand Champion. At the end of 2020, Americas Sweethearts has a fair value of $720,000 and a book value of $850,000, which includes any goodwill recorded. Of this fair value, $350,000 is attributable to identifiable assets net of (or identifiable net assets) liabilities.
Required:
Calculate the impairment loss of goodwill (if any) and record the appropriate journal entry. |
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