On March 31, 2014, Rodeo Company paid $6,000,000 to acquire all of the common stock of Drive Incorporated, which became a division of Rodeo. Drive reported the following balance sheet at the time of the acquisition.

Current assets $2,400,000 Current liabilities $ 500,000

Noncurrent assets 3,200,000 Long-term liabilities 300,000

Total assets $5,600,000 Stockholders equity 4,800,000

Total liabilities and equity $5,600,000

It was determined at the date of the purchase that the fair value of the identifiable net assets of Drive was $4,500,000. Over the next 9 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 31,2014, Drive reports the following balance sheet information.

Current assets $1,600,000

Noncurrent assets (including goodwill recognized in purchase) 3,800,000

Current liabilities (600,000)

Long-term liabilities (400,000)

Net assets $4,400,000

It is determined that the fair value of the Drive Division is $4,500,000. The recorded amount for Drives net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value $100,000 above the carrying value.

Required (a) Compute the amount of goodwill recognized, if any, on March 31,2014.

(b) Determine the impairment loss, if any, to be recorded on December 31, 2014.

(c) Assume that fair value of the Drive Division is $4,000,000 instead of $4,500,000. Determine the impairment loss, if any, to be recorded on December 31, 2014.

(d) Prepare the journal entry to record the impairment loss, if any, and indicate where the loss would be

reported in the income statement.