On January 1, Palisades, Inc., acquired 100 percent of Sherwood Company's common stock for a fair value of $120,240,000 in cash and stock. The carrying amounts of Sherwood's assets and liabilities equaled their fair values except for its equipment, which was undervalued by $524,000 and had a 10-year remaining life. Palisades specializes in media distribution and viewed its acquisition of Sherwood as a strategic move into content ownership and creation. Palisades expected both cost and revenue synergies from controlling Sherwood's artistic content (a large library of classic movies) and its sports programming specialty video operation. Accordingly, Palisades allocated all of Sherwood's assets and liabilities (including all $49,820,000 of goodwill recognized in the acquisition) to a newly formed operating segment appropriately designated as a reporting unit. However, Sherwood's assets have taken longer than anticipated to produce the expected synergies with Palisades's operations. Accordingly, Palisades reviewed events and circumstances and concluded that Sherwood's fair value was likely less than its carrying amount. At year-end, Palisades assessed the Sherwood reporting unit's fair value to $110,240,000. At December 31, Palisades and Sherwood submitted the following balances for consolidation. There were no intra-entity payables on that date. Also, Palisades had not yet recorded any goodwill impairment. Revenues Operating expenses Equity in Sherwood's earnings Dividends declared Retained earnings, 1/1 Cash Receivables (net) Investment in Sherwood Broadcast licenses Movie library Equipment (net) Current liabilities Long-term debt Common stock Palisades, Inc. Sherwood Co. $ (18,570,000) 10,350,000 (147,600) 360,000 (52,360,000) $(12,240,000) 121,000 12,040,000 104,000 (2,276,000) 331,000 234,000 909,000 410,000 425,000 14,038,000 45,240,000 131,120,000 17,620,000 (197,000) (710,000) (21,975,000) 120,283,600 (170,120,000) (7,370,000) (67,620,000) a. What is the relevant test to determine whether goodwill is impaired? b. How did Palisades determine Sherwood's December 31 carrying amount of $120,283,600? c. At what amount should Palisades record an impairment loss for its Sherwood reporting unit for the year? d. What is consolidated net income for the year? e. What is the December 31 consolidated balance for goodwill? f. Prepare a consolidated worksheet for Palisades and Sherwood (Palisades's trial balance should first be adjusted for any appropriate impairment loss). Answer is not complete. Complete this question by entering your answers in the tabs below. Req A Req B Req C to E Req F Prepare a consolidated worksheet for Palisades and Sherwood (Palisades trial balance should first be adjusted for any appropriate impairment loss). (For accounts where multiple consolidation entries are required, combine all debit entries into one amount and enter this amount in the debit column of the worksheet. Similarly, combine all credit entries into one amount and enter this amount in the credit column of the worksheet. Input all amounts as positive values.) Show less PALISADES AND SHERWOOD Consolidated Worksheet December 31 Consolidated Entries Consolidated Accounts Palisades, Inc. Sherwood Co. Debit Credit Totals Revenues Expenses Equity in Sherwood earnings Impairment loss Net income/loss Retained earnings 1/1 Dividends declared Net income/loss Retained earnings 12/31 Cash Receivables (net) Investment in Sherwood Broadcast licenses Movie library Equipment (net) Goodwill Total assets Current liabilities Long-term debt Common stock Retained earnings 12/31 Total liabilities and equity $ 0 $ 0 $ 0 $ 0