On December $31(1$ year after the acquisition$),$ Green River$$s management conducted

its annual impairment test for goodwill. Management has also assessed recent events

and determined that it should review its plant and equipment and finite$-$life intangible

assets for possible impairment. Management determines AutoStyle to be the reporting

unit, which is also the cash$-$generating unit. Management estimated that the fair value of

the unit $($AutoStyle$)$ with goodwill $1$ year after the acquisition was $$300,000$; its value in

use was $$310,000$; and the costs to sell were $$20,000.$ The net assets of the unit,

excluding goodwill, were appraised at $$294,000.$ Assume that annual depreciation is

$$5,000,$ annual amortization for the customer list is $$1,000,$ and the annual amortization

for the other intangible assets is $$3,500.$ Green River uses separate accounts for

accumulated depreciation and accumulated amortization. Treat the customer list as a

finite$-$life intangible asset.

Management is unable to determine fair values for the reporting unit$$s assets, but it

estimates the following future cash flows for each of the unit$$s assets with the exception

of goodwill. Assume that Green River$$s cost of capital is $5\%.$

DELIVERABLES

a$.$ Compute the amount of goodwill to be recorded on the date of acquisition.

b$.$ Conduct the impairment test for goodwill at the end of the year, $1$ year after the

acquisition. Assume no changes in the reporting unit$$s assets and liabilities

except for depreciation and amortization.

c$.$ Conduct the impairment tests indicated for assets other than goodwill at the end

of the year, $1$ year after the acquisition.

d$.$ Prepare the journal entries required to record any impairment losses computed in

parts $($b$)$ and $($c$).$

This assignment is due by Sunday at $11$:$59$ pm$.$