Question 32

262,500) $525,000 682,500 395,000 $1,077,500 Unrecorded asset: How much Goodwill will you record in this acquisition, and how is the Goodwill accounted for subse quent to the acquisition? 2 Compute the amount of acquired Goodwill, including contingent earnings and bargain purchas Assume that you are charged with assigning fair values related to a $3,765,000 acquisition. You dete mine that the fair value of the net identifiable tangible assets is $1,850,000. You also conclude that th purchase included a Customer List with a fair value at $337,000. How much Goodwill will you record in this acquisition, and how is the Goodwill accounted for subsequent to the acquisition? a. Continuing from Part a, now also assume that the purchase and sale agreement requires the payment of an additional $850,000 if the subsidiary achieves a certain level of earnings. You b. estimate the fair value of that contingent earnings clause in the agreement to be $216,500. How does this additional information affect your computation of Goodwill? This part of the exercise is independent of Parts a and b. Assume that the purchase price is $3,765,000 and that fair value of the net identifiable tangible assets is $1,850,000. You also conclude that the purchase included a Customer List that you value at $638,000 and a Patent c. valued at $1,950,000. How much Goodwill will you record in this acquisition? 33. Goodwill Impairment Test Assume that the equity method Equity Investment account relating to a subsidiary has a reported b ance of $6,250,000, including $619,000 of Goodwill. You currently value that subsidiary at $5,625,0 8 and estimate that the fair value of the subsidiary's net assets is $5,375,000 Should you perform a test for potential impairment of Goodwill