Question
On May 31, 2018, Armstrong Company paid $3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall
On May 31, 2018, Armstrong Company paid $3,500,000 to acquire all of the common stock of Hall Corporation, which became a division of Armstrong. Hall reported the following balance sheet at the time of the acquisition:
Cuurent assets | $900,000 | Current liabilities | $600,000 |
Non-current assets | 2,700,000 | Long-term liabilities | 500,000 |
Shareholders' equity | 2,500,000 | ||
Total liabilities and | |||
Total assets | 3,600,000 | stockholders' equity | $3,600,000 |
It was determined at the date of the purchase that the fair value of the identifiable net assets of Hall was $3,100,000.
At December 31, 2018, Hall reports the following balance sheet information:
Current assets $ 800,000
Noncurrent assets (including goodwill recognized in purchase) 2,400,000
Current liabilities (700,000)
Long-term liabilities (500,000)
Net assets $2,000,000
It is determined that the fair value of the Hall division is $2,200,000.
1. Compute the amount of goodwill recognized, if any, on May 31, 2018.
2. Determine the impairment loss, if any, to be recorded on December 31, 2018
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started