Reference no: EM133063672
Question - Francisco Incorporated acquires 100% of the voting stock of Beltran company on January 1, 2014. In exchange, Francisco paid $450,000 cash and issued 104,000 shares of its own $1 par value common stock. On this date, Francisco's stock had a fair value of $12 per share. The combination is a statutory merger with Beltran subsequently dissolved as a legal corporation. Beltran's assets and liabilities are assigned to a new reporting unit.
The following reports the fair values for the Beltran reporting unit on January 1, 2014 and December 31, 2015, and the respective book values on December 31, 2015.
January 1, 2014 Fair Value:
Cash: $75,000
Receivables: $193,000
Inventory: $281,000
Patents: $525,000
Customer Relations: $500,000
Equipment (Net): $295,000
AP: (121,000)
Long-Term Liabilities: ($450,000)
Goodwill: ?
December 31, 2015 Fair Value:
Cash: $50,000
Receivables: $225,000
Inventory: $305,000
Patents: $600,000
Customer Relations: $480,000
Equipment (Net): $240,000
AP: ($175,000)
Long-Term Liabilities: ($400,000)
Goodwill: ?
December 31, 2015 Book Value:
Cash: $50,000
Receivables: $225,000
Inventory: $300,000
Patents: $500,000
Customer Relations: $450,000
Equipment (Net): $235,000
AP: ($175,000)
Long-Term Liabilities ($400,000)
Goodwill: $400,000
On December 31, 2015, Francisco elects to forego any goodwill impairment qualitative assessment and estimates that the total far value of the entire Beltran reporting unit is $1,425,000. What amount of goodwill impairment, if any, should Francisco include on its 2015 income statement?