Use the data provided in Pl2 7 Assume instead that Meridan
Use the data provided in Pl2-7. Assume instead that Meridan Golf and Sports is a public company. The relevant information for the impairment test on December 31, 2016, is as follows:
In exercsie
Meridan Golf and Sports was formed on July 1, 2014, when Steve Powerdriver purchased Old Master Golf Corporation. Old Master provides video golf instruction at kiosks in shopping malls. Powerdriver's plan is to make the instruction business part of his golf equipment and accessory stores. Powerdriver paid $650,000 cash for Old Master. At the time of purchase, Old Masters balance sheet reported assets of $550,000 and liabilities of $100,000 (shareholders' equity was $450,000). The fair value of Old Master's identifiable assets was estimated to be $700,000. Included in the identifiable assets was the Old Master trade name with a fair value of $15,000 and a copyright on some instructional books with a fair value of $25,000. The trade name had a remaining legal life of five years and can be renewed indefinitely at nominal cost. The copyright had a remaining life of 40 years.
Provide the calculations for the impairment test and any associated journal entry.
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