Question: On January 1 2010 Porsche Company acquired 100 of Saab

On January 1, 2010, Porsche Company acquired 100% of Saab Company’s stock for $450,000 cash. The fair value of Saab’s identifiable net assets was $375,000 on this date. Porsche Company decided to measure goodwill impairment using comparable prices of similar businesses to estimate the fair value of the reporting unit (Saab). The information for these subsequent years is as follows:

A. For each year determine the amount of goodwill impairment, if any. Hint: You may wish to refer back to the section entitled Goodwill Impairment Test in Chapter 2.
B. Prepare the workpaper entries needed each year (2011 through 2013) on the consolidating worksheet to record any goodwill impairment assuming:
1. The cost or partial equity method is used.
2. The complete equity method isused.

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  • CreatedMarch 13, 2015
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