On January 1, Prine, Inc., acquired 100 percent of Lydia Companys common stock for a fair value of $123,894,250 in cash and stock. Lydias assets and liabilities equaled their fair values except for its equipment, which was undervalued by $677,500 and had a 10-year remaining life.

Prine specializes in media distribution and viewed its acquisition of Lydia as a strategic move into content ownership and creation. Prine expected both cost and revenue synergies from controlling Lydias artistic content (a large library of classic movies) and its sports programming specialty video operation. Accordingly, Prine allocated Lydias assets and liabilities (including $51,332,250 of goodwill) to a newly formed operating segment appropriately designated as a reporting unit.

The fair values of the reporting units identifiable assets and liabilities through the first year of operations were as follows.

	Fair Values
Account	1/1			12/31
Cash	$	247,000		$	226,500
Receivables (net)		543,000			1,067,500
Movie library (25-year remaining life)		41,050,000			63,220,000
Broadcast licenses (indefinite remaining life)		15,890,000			20,360,000
Equipment (10-year remaining life)		21,420,000			19,540,000
Current liabilities		(528,000	)		(787,500	)
Long-term debt		(6,060,000	)		(6,620,000	)

However, Lydias assets have taken longer than anticipated to produce the expected synergies with Prines operations. Accordingly, Prine reviewed events and circumstances and concluded that Lydias fair value was likely less than its carrying amount. At year-end, Prine reduced its assessment of the Lydia reporting units fair value to $114,006,500.

At December 31, Prine and Lydia submitted the following balances for consolidation. There were no intra-entity payables on that date.

	Prine, Inc.			Lydia Co.
Revenues	$	(25,100,000	)	$	(19,200,000	)
Operating expenses		18,100,000			18,600,000
Equity in Lydia earnings		(532,250	)
Dividends declared		300,000			120,000
Retained earnings, 1/1		(61,000,000	)		(4,384,500	)
Cash		570,750			226,500
Receivables (net)		455,000			1,067,500
Investment in Lydia		124,306,500
Broadcast licenses		512,500			14,820,000
Movie library		367,500			45,100,000
Equipment (net)		145,600,000			19,300,000
Current liabilities		(780,000	)		(869,500	)
Long-term debt		(27,800,000	)		(7,280,000	)
Common stock		(175,000,000	)		(67,500,000	)

What is the relevant initial test to determine whether goodwill could be impaired?

At what amount should Prine record an impairment loss for its Lydia reporting unit for the year?

What is consolidated net income for the year?

What is the December 31 consolidated balance for goodwill?

What is the December 31 consolidated balance for broadcast licenses?

Prepare a consolidated worksheet for Prine and Lydia (Prines trial balance should first be adjusted for any appropriate impairment loss).