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Prepare the journal entry to record goodwill impairment

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Reference no: EM132364269

Question

On Jan 1, 2010, Payton Company acquired the net assets of Stallings Company for $500,000 cash. The fair value of Stalling's net identifiable assets was $425,000 on this date. Payton Company decided to measure goodwill impairment using the present value of future cash flows to estimate the fair value of the reporting unit of Stallings. The information for the subsequent years is as follows:

ear Present Value of Future Cash-Flows Carrying Value of Stallings' Identifiable Net Assets Fair Value of Stallings' Identifiable Net Assets 2011 $ 450,000 $ 400,000 $ 395,000 2012 $ 400,000 $ 320,000 $ 350,000 2013 $ 350,000 $ 300,000 $ 330,000

Required:

A. For each year, determine the amount of goodwill impairment if any (show all calculations and work).

B. Prepare the Journal Entry to record goodwill impairment for each year, if needed.

Reference no: EM132364269

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