On January 1, 2012 SBC Corporation purchased all the outstanding stock of ABC Inc. paying $2800 (million) cash. As part of the deal SBC assumed all of the liabilies of ABC. Book values and fair values of accquired assets and liabilities are shown below:

ABC Balance Sheet (millions)

BOOK Value Fair Value

Current Assets (net) $400 $500

Property, plant and equi. $2000 $2500

Liabilities $600 $700

Requirements:

1. Determine the amount, if any, of goodwill SBC will record with this transaction

2. Discuss the subsequent meansurement of Goodwill, including summary of the steps that management will take regarding the subsequent meansurement of Goodwill under USGAAP.

Use this information for 3 and 4-

At the end of 2013, significant labor cost increases have resulted in sustained declining cash flows for the ABC reporting unit and SBC projects that revenues for the ABC reporting unit will be significantly less than anticipated. Additional information is as follows (millions):

Fair value of SBC (per appraisal) $1900

Fair value of SBC's net assets (excluding goodwill) $1600

Book value of SBC;s net assets (including goodwill) $2600

Book value of SBC's net assets (exluding goodwiil) $2100

Present value of SBC's est. future cash flows $2200

3. What amount, if any, will be reported as an impairment loss on goodwill under USGAAP at 12/31/13? (Answer should clearly address the steps you had in question 2)

4. What value would be reported for Goodwill on the balance sheet under IFRS at 12/31/13 If ABC is considered a cash generating unit?