Wolf Pack Transport Co. has a 25 percent equity investment in Maggie Valley Depot (MVD), Inc., which
Question:
However, competition in the transit warehousing industry has increased in the past 12 months. In the same area as the MVD facility, a competitor company opened two additional warehouses that are much more conveniently located near a major interstate highway. MVD's revenues declined 30 percent as customers shifted their business to the competitor's facilities and the prices for warehouse services declined. The market value of Wolf Pack's stock ownership in MVD fell to $1,700,000 from a high last year of $2,500,000. MVD's management is currently debating ways to respond to these events but has yet to formulate a firm plan.
Required
1. What guidance does the FASB ASC provide for equity method investment losses in value?
2. Should Wolf Pack recognize the decline in the value of its holdings in MVD in its current year financial statements?
3. Should Wolf Pack test for impairment of the value it had initially assigned to goodwill?
Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Advanced Accounting
ISBN: 978-0077431808
10th edition
Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik
Question Posted: