On Portland's December 31, 2014 trial balance, what is the balance in its Investment in Salem account at December 31,
Use the following information to answer questions l - 4 below:
On January l, 2011, Portland Company acquired all of Salem Company's voting stock for $16,000,000 in cash. Some of Salem's assets and liabilities at the date of purchase had fair values that differed from reported values, as follows:
Salem's total stockholders' equity at January 1, 2011, was $4,000,000. It is now December 31, 2014 (four years later). Salem's retained earnings reflect the accumulation of income less dividends; there have been no other changes in its retained earnings. Cumulative goodwill impairment to the beginning of 2014 is $2,000,000. Goodwill impairment for 2014 is $500,000. Portland uses the complete equity method to account for its investment. The December 31,2014, trial balance for Salem appears below.
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...
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