Sheffields Construction & Paving expanded its business by purchasing Alcott Maintenance, a division that provides road maintenance services. The division was purchased three years ago for $3,012,000 and has been identified as a reporting unit. The net assets for the division including goodwill are as follows:

Cash		$247,000
Accounts Receivables		322,000
Inventory		796,000
Property, Plant & Equipment		888,000
Goodwill		1,149,000
Accounts Payable		(120,000	)
Unearned Revenue		(77,000	)
Net assets, at carrying amounts		$3,205,000

The fair value of the Alcott Maintenance Division reporting unit as a whole is estimated to be $3,426,000. Management determines that the units value in use is $3,519,000.

Partially correct answer iconYour answer is partially correct.

Prepare any appropriate journal entries for goodwill impairment assuming that Sheffield Construction & Paving is reporting under ASPE. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

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List of Accounts

Partially correct answer iconYour answer is partially correct.

Prepare any appropriate journal entries for goodwill impairment assuming that Sheffield Construction & Paving is reporting under IFRS. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Account Titles and Explanation	Debit	Credit

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List of Accounts

Questions 2

Pina Industries net income for the last five years, average earnings, and fair value of identifiable assets are as follows

Earnings History				Fair Values, December 3, 2019
2014		$137,000		Cash		$71,000
2015		141,000		Accounts Receivables		112,000
2016		141,000		Inventory		83,000
2017		126,000		Property, Plant & Equipment		222,000
2018		158,000		Land		103,000
Total for 5 years		$703,000		Liabilities		84,000
				Fair value of identifiable net assets		$507,000

The return on investment of an average firm in the same industry is 20%. Excess earnings are capitalized at a discount rate of 20% in perpetuity. Estimate the value of goodwill using the excess-earnings approach.

Value of Goodwill

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