ShowOn January $1,$ Palisades, Incorporated, acquired $100$ percent of Sherwood Company$$s common stock for a fair value of $$120,000,000$ in cash and stock. The carrying amounts of Sherwood$$s assets and liabilities equaled their fair values except for its equipment, which was undervalued by $$500,000$ and had a $10-$year remaining life.

Palisades specializes in media distribution and viewed its acquisition of Sherwood as a strategic move into content ownership and creation. Palisades expected both cost and revenue synergies from controlling Sherwood$$s artistic content $($a large library of classic movies$)$ and its sports programming specialty video operation. Accordingly, Palisades allocated all of Sherwood$$s assets and liabilities $($including all $$50,000,000$ of goodwill recognized in the acquisition$)$ to a newly formed operating segment appropriately designated as a reporting unit.

However, Sherwood$$s assets have taken longer than anticipated to produce the expected synergies with Palisades$$s operations. Accordingly, Palisades reviewed events and circumstances and concluded that Sherwood$$s fair value was likely less than its carrying amount. At year$-$end, Palisades assessed the Sherwood reporting unit$$s fair value to $$110,000,000.$

At December $31,$ Palisades and Sherwood submitted the following balances for consolidation. There were no intra$-$entity payables on that date. Also, Palisades had not yet recorded any goodwill impairment.

Accounts Palisades, Incorporated Sherwood Company

Revenues $ $(18,570,000)$ $ $(12,000,000)$

Operating expenses $10,350,00011,800,000$

Equity in Sherwood's earnings $(150,000)-$

Dividends declared $300,00080,000$

Retained earnings, $1/1(52,000,000)(2,000,000)$

Cash $175,000109,000$

Receivables $($net$)210,000897,000$

Investment in Sherwood $120,070,000-$

Broadcast licenses $350,00014,014,000$

Movie library $365,00045,000,000$

Equipment $($net$)131,000,00017,500,000$

Current liabilities $(185,000)(650,000)$

Long$-$term debt $(21,915,000)(7,250,000)$

Common stock $(170,000,000)(67,500,000)$

Required:

What is the relevant test to determine whether goodwill is impaired?

How did Palisades determine Sherwood's December $31$ carrying amount of $$120,070,000?$

At what amount should Palisades record an impairment loss for its Sherwood reporting unit for the year?

What is consolidated net income for the year?

What is the December $31$ consolidated balance for goodwill?

Prepare a consolidated worksheet for Palisades and Sherwood $($Palisades$$s trial balance should first be adjusted for any appropriate impairment loss$).$ me the steps to solve this question: