This problem uses the information from Problem 11-4 or Problem 11-5. Recall that on January 1, 2019, P Company, a European based-company, purchased 80% of S Company for €200,000 (when the common stock account was 80,000, other contributed capital was 50,000, and retained earnings were 40,000). The trial balances at the end of 2020 are reported below. P Company acquired S Company because it wanted to expand its operations geographically. S Company is located in the United States and will be classified as a CGU. P Company elects to test for impairment on December 31 of each year. Because both P Company and S Company sell similar inventory, their inventory policies must conform for consolidation purposes. P Company uses average cost for inventories and S Company used FIFO.

Twelve thousand euros of the excess of implied value over book value was allocated to land with the remainder becoming goodwill. At December 31, 2020, the carrying value of Company S (before allocating the excess of implied over book value) was €217,000. The estimated fair value less cost to dispose of Company S was €290,000, which was higher than the value in use amount.

Required:

A. Compute the carrying value of Company S needed to perform the goodwill impairment test. Does it matter which method (proportionate or fair value) is used to compute noncontrolling interest on the date of acquisition?

B. Compute the amount of goodwill impairment, if any?

C. Suppose that the excess of carrying value exceeded the recoverable amount by $50,000. If the proportionate method were used, what impairment amounts would be recorded and which equity interest (controlling or noncontrolling) is assigned an impairment charge.