Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Identifiable Intangibles and Goodwill, U.S. GAAP International Foods, a U.S. company, acquired two companies in 2019. As a result, its consolidated financial statements include the

Identifiable Intangibles and Goodwill, U.S. GAAP

International Foods, a U.S. company, acquired two companies in 2019. As a result, its consolidated financial statements include the following acquired intangibles:

Intangible Asset Date of Acquisition Fair Value at Date of Acquisition Useful Life
Customer relationships January 1, 2019 $4,000,000 4 years
Favorable leaseholds June 30, 2019 8,000,000 5 years
Brand names June 30, 2019 18,000,000 Indefinite
Goodwill January 1, 2019 500,000,000 Indefinite

Goodwill was assigned to the following reporting units:

Asia $100,000,000
South America 150,000,000
Europe 250,000,000
Total $500,000,000

It is now December 31, 2020, the end of International Foods accounting year. No impairment losses were reported on any intangibles in 2019. Assume that International Foods bypasses the qualitative option for impairment testing of goodwill and indefinite-life intangibles. Additional information at December 31, 2020 is as follows:

Intangible Asset Sum of Future Expected Undiscounted Cash Flows Sum of Future Expected Discounted Cash Flows
Customer relationships $1,200,000 $900,000
Favorable leaseholds 6,000,000 4,400,000
Brand names 14,000,000 7,000,000

Reporting Unit Unit Carrying Value Unit Fair Value
Asia $300,000,000 $400,000,000
South America 200,000,000 350,000,000
Europe 600,000,000 500,000,000

Required

Compute 2020 amortization expense and impairment losses on the above intangibles, following U.S. GAAP.

Enter answers in millions, using decimal places when applicable.

(in millions)
Amortization expense - identifiable intangibles $Answer

Impairment losses - identifiable intangibles Answer

Goodwill impairment loss Answer

Total $Answer

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing Cases An Interactive Learning Approach

Authors: Mark S Beasley, Frank A. Buckless, Steven M. Glover, Douglas F Prawitt

7th Edition

0134421825, 9780134421827

More Books

Students also viewed these Accounting questions