Prepare the journal entry for blaha to record the impairment

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Question - Several years ago, Blaha Company purchased Husker Company as a subsidiary. At that time, Blaha recorded goodwill of $100,000 related to the purchase. Since that time, the company has not considered the goodwill to be impaired. However, at the end of 2013, Blaha decides to evaluate the goodwill for impairment because of technological changes in the industry. Husker (which is considered a reporting unit of Blaha) has a book value (including the goodwill) of $800,000. Blaha estimates that the fair value of Husker is $720,000, of which it allocates $660,000 to the Husker's identifiable assets and liabilities.

1. Prepare the journal entry (if any) for Blaha to record the impairment of its goodwill at the end of 2013.

2. Assume that Blaha uses IFRS and has estimated the recoverable amount of Husker (which qualifies as a cash generating unit) to be $740,000. Prepare the journal entry for Blaha to record the impairment of its goodwill at the end of 2013.

Reference no: EM131915568

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