+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
Salaries payable, $3,750,000, due January 14, 2011. Indicate in what circumstances, if any, each of the three liabilities above would be excluded from current liabilities.
Finlon Upholstery Inc. uses a job-order costing system to accumulate manufacturing costs. The company's work-in-process on December 31, 2001, consisted of one job (no. 2077)
(Accounting Organizations and Documents Issued) Presented below are a number of accounting organizations and types of documents they have issued. Match the appropriate documen
They saved their money and bought a lake lot as tenants by the entirety. Deborah failed to pay the loans she took out from Savings Bank prior to her marriage to pay for coll
Ratios provide the users of financial statements with a great deal of information about the entity. Do ratios tell the whole story? How could liquidity ratios be used by i
The president of Blue Skies Corp. and his vice presidents are reviewing the operating results of the year just completed. Sales increased by 15% from the previous year to $6
12 Incurred a repair expense for repairs of $600. Darlene Cook Company agreed to pay in 60 days. This transaction involves an increase in accounts payable and repair expense
Prepare a client style professional report with recommendations/conclusions to present to your employer on the possible purchase of Springfield House and the shares in Green