Question

On April 15, 2016, Oderin Inc. (Oderin) purchased 100 percent of the common shares of Bellburn Ltd. (Bellburn) for $16,000,000. At the time of the purchase, Oderin's management made the following es timates of the fair values of Bellburn's assets and liabilities:
Current assets .......... $7,000,000
Tangible capital assets........ 17,000,000
Patents............. 3,500,000
Current liabilities ........... 4,750,000
Long-term debt ............ 10,250,000

Required:
a. Calculate the amount of goodwill that Oderin recorded when it purchased Bellburn on April 15, 2016.
b. In fiscal 2020, management determined that the goodwill associated with the purchase of Bellburn was impaired and that it should be written down to $2,500,000. Prepare the journal entry that Oderin would make to record the impairment of the goodwill. What amount would be reported on the fiscal 2020 balance sheet for goodwill and what expense would be reported in the income statement?



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  • CreatedFebruary 26, 2015
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