Reference no: EM131702655

Question - Wahoo Company purchased Haddock Company in a merger and put the net assets of Haddock Company on its books. The cost (book values) values to Wahoo on January 1, 2016 and fair values of Haddock's former net assets on December 31, 2016 are:

                          Cost (Book)      Fair Value

Cash                   $300,000          $300,000

Other Assets        $900,000          $1,100,000

Total                   $1,200,000       $1,400,000

Liabilities             $100,000          $200,000

Wahoo's initial cost of Haddock's net assets was $1,400,000 with $300,000 attributed to goodwill. They know they can sell Wahoo for $1,300,000 on December 31, 2014, its fair value as a company.

Perform the impairment test and make any necessary journal entry.