On May 31, 2018, Nadal Company paid $3,500,000 to acquire all of the common stock of Agassi Corporation, which became a division of Nadal. Agassi reported the following balance sheet at the time of the acquisition:

Current assets $ 900,000 Current liabilities $ 600,000

Noncurrent assets 2,700,000 Long-term liabilities 500,000

Stockholders 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 Agassi was $3,100,000. At December 31, 2018, Agassi 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 Agassi division is $2,200,000. The recorded amount for Agassis net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value of $200,000 above the carrying value.

Instructions

(a) Compute the amount of goodwill recognized, if any, on May 31, 2018.

(b) Determine the impairment loss, if any, to be recorded on December 31, 2018.

(c) Assume that the fair value of the Agassi division is $1,950,000 instead of $2,200,000. Prepare the journal entry to record the impairment loss, if any, on December 31, 2018.