Question
On May 28, 2024, Pesky Corporation acquired all of the outstanding common stock of Harman, Incorporated, for $460 million. The fair value of Harman's identifiable
On May 28, 2024, Pesky Corporation acquired all of the outstanding common stock of Harman, Incorporated, for $460 million. The fair value of Harman's identifiable tangible and intangible assets totaled $540 million, and the fair value of liabilities assumed by Pesky was $180 million.
Pesky performed a goodwill impairment test at the end of its fiscal year ended December 31, 2024. Management has provided the following information:
| Fair value of Harman, Incorporated | $ 440 | million |
|---|---|---|
| Fair value of Harman's net assets (excluding goodwill) | 375 | million |
| Book value of Harman's net assets (including goodwill) | 458 | million |
Required:
- Determine the amount of goodwill that resulted from the Harman acquisition.
- Determine the amount of goodwill impairment loss that Pesky should recognize at the end of 2024, if any.
- If an impairment loss is required, prepare the journal entry to record the loss.
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Internal Auditing Assurance & Advisory Services
Authors: Urton L. Anderson, Michael J. Head, Sridhar Ramamoorti, Cris Riddle, Mark Salamasick, Paul J. Sobel
4th Edition
0894139878, 978-0894139871
