Albers Company acquires an 80 interest in Barker Company on
Albers Company acquires an 80% interest in Barker Company on January 1, 2011, for $850,000. The following determination and distribution of excess schedule is prepared at the time of purchase:
Albers uses the simple equity method for its investment in Barker. As of December 31, 2015, Barker has earned $200,000 since it was purchased by Albers. Barker pays no dividends during 2011–2015.
On December 31, 2015, the following values are available:
Fair value of Barker’s identifiable net assets (100%) ........... $ 900,000
Estimated fair value of Barker Company (net of liabilities)......... 1,000,000
Determine if goodwill is impaired. If not, explain your reasoning. If so, calculate the loss on impairment.
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