On July 31, 2017,CraneCompany paid $2,750,000to acquire all of the common stock of Conchita Incorporated, which became a division ofCrane. Conchita reported the following balance sheet at the time of the acquisition.

Current assets$830,000

Current liabilities$530,000

Noncurrent assets2,450,000

Long-term liabilities430,000

Total assets$3,280,000

Stockholders' equity2,320,000

Total liabilities and stockholders' equity$3,280,000

It was determined at the date of the purchase that the fair value of the identifiable net assets of Conchita was $2,450,000. Over the next 6 months of operations, the newly purchased division experienced operating losses. In addition, it now appears that it will generate substantial losses for the foreseeable future. At December 31, 2017, Conchita reports the following balance sheet information.

Current assets$460,000

Noncurrent assets (including goodwill recognized in purchase)2,450,000

Current liabilities(700,000)

Long-term liabilities(500,000)

Net assets$1,710,000

It is determined that the fair value of the Conchita Division is $1,850,000. The recorded amount for Conchita's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value $180,000above the carrying value.

PART 1

Compute the amount of goodwill recognized, if any, on July 31, 2017.

The amount of goodwill _______________________

PART 2

Determine the impairment loss, if any, to be recorded on December 31, 2017

The impairment loss ____________________________

PART 3

Assume that fair value of the Conchita Division is $1,650,000instead of $1,850,000. Determine the impairment loss, if any, to be recorded on December 31, 2017.

The impairment loss ______________________

PART 4

Prepare the journal entry to record the impairment loss, if any, and indicate where the loss would be reported in the income statement.(Credit account titles are automatically indented when amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Account Titles and Explanation Debit Credit

loss of impairment

_________________

This loss will be reported in income as a separate line item before the subtotal _____________________

Choices: COGS, Extraordinary Income, Income from continuing operations, income from discontinuing operations