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Prepare the journal entry to record the goodwill impairment

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Reference no: EM132899823

Kentfield Corporation has $40 million of goodwill on its book from the 2010 acquisition of Seaford Shipping Inc. Before 2013, Kentfield didn't recognize any goodwill impairment for the cash generating unit of Seaford Shipping Inc.

At December 31, 2013, the division of Seaford Shipping reports the following information for its annual goodwill impairment test:

($ in millions)
Fair Value of Seaford less costs-to-sell: $825
Book value of Seaford's net assets (excluding the $40 million good will); $810
Present value of estimated future cash flows from Seaford: $800

Required:

Problem a) Is there any goodwill impairment for 2013? If yes, please prepare the journal entry for goodwill impairment loss. Otherwise, you just claim "no impairment.' Show necessary calculation.

Problem b) Assume that the fair value of Seaford less costs-to-sell is $780 instead of $825. Please prepare the journal entry to record the goodwill impairment. For this journal entry if it's necessary, please use "Assets" account to represent the general assets of Seaford.

Reference no: EM132899823

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