+1-415-670-9189
info@expertsmind.com
Should palmer consider any goodwill impairment
Course:- Accounting Basics
Reference No.:- EM13700192




Assignment Help
Assignment Help >> Accounting Basics

Palmer, owner of Palmer Interiors, is negotiating for the purchase of Ruth Inc. The balance sheet of Ruth Inc. is given in an abbreviated form, as follows.
RUTH INC.
BALANCE SHEET
AS OF DECEMBER 31, 2014
Assets Liabilities and Stockholders' Equity
Cash $ 240,000 Accounts payable $ 120,000
Land 168,000 Long-term notes payable 720,000
Building (net) 480,000 Total liabilities 840,000
Equipment (net) 420,000 Common stock $480,000
Copyright (net) 72,000 Retained earnings 60,000
Total assets $1,380,000 Total liabilities and stockholders' equity $1,380,000
Palmer and Ruth agree that:
1. Land is undervalued by $72,000.
2. Equipment is overvalued by $12,000.
Ruth agrees to sell the business to Palmer for $840,000.
Instructions:
(1) Prepare the entry to record the purchase of Ruth Inc. on Palmer's books.
(2) At the end of 2015, Palmer determines that the net assets of Ruth, now a division of his company, are 600,000. Palmer also determines that the fair value of Ruth division is 500,000. Should Palmer consider any goodwill impairment? If yes, what's the impairment loss? (Assume all identifiable assets' and liabilities' book and fair value amounts are the same).




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Accounting Basics) Materials
This year, the IRS sent Peaceful an audit notice. It contends that the amount prepaid under Peaceful’s program constitutes prepaid income that must be included in Peaceful’s i
Mabel is a lawyer for a large law firm, Winken, Blinken, and Nod. Winken pays Mabel's annual license renewal fee of $400 and her $300 annual dues to the Ameri- can Lawyers'
Johnson Auto Body uses a job order cost system. Overhead is applied to jobs on the basis of direct labor hours. During the current period, was charged $425 in direct materia
Assuming that the desired rate of return is 20%, determine the net present value for the proposal. Use the table of the present value of $1 presented above. If required, rou
Gansac Publishing Company signed a contract with an author to publish her book. The signing took place on January 1, 2016, and a payment of $20,000 was made to obtain a cop
Visit a local movie theater and check out both its concession area and its showing areas. The manager of a theater must confront questions such as: How much return do we ear
Buffon Electronics Company issues a $1,000,000, 10%, 20-year mortgage note on January 1. The terms provide for semiannual installment payments, exclusive of real estate taxe
D.L. Manufacturing Inc.'s joint cost of producing 1,000 units of Product A, 500 units of Product B, and 500 units of Product C is $20,000. The unit sales values of the three