In 2011, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to

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In 2011, Alliant Corporation acquired Centerpoint Inc. for $300 million, of which $50 million was allocated to goodwill. At the end of 2013, management has provided the following information for a required goodwill impairment test:

Fair value of Centerpoint, Inc. ..............$220 million

Fair value of Centerpoint’s net assets (excluding goodwill) .... 200 million

Book value of Centerpoint’s net assets (including goodwill) ... 250 million


Required:

1. Determine the amount of the impairment loss.

2. Repeat requirement 1 assuming that the fair value of Centerpoint is $270 million.


Goodwill
Goodwill is an important concept and terminology in accounting which means good reputation. The word goodwill is used at various places in accounting but it is recognized only at the time of a business combination. There are generally two types of...
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate accounting

ISBN: 978-0077647094

7th edition

Authors: J. David Spiceland, James Sepe, Mark Nelson

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