Answer

Problem VIII-Goodwill Problem sion of Armstrong. Hall reported the following balance sheet at the time 22 points ny paid $3,300,000 to acquire all of the common stock of Hall 3,300,000 to On May 31, 2015, Armstrong Company OnMaywhich became Corporation, which became a division of Armstron of the acquisition: 1,2015, Armsme a division o S 900,000 2,700,000 Current liabilities Long-term liabilities Stockholders' equity ,500.000 Total liabilities and Current assets Noncurrent assets s 600,000 500,000 3.600,000 stockholders' equity$3,600.000 Total assets It was determined at the dat was $2,800,000. At ined at the date of the purchase that the fair value of the identifiable net assets of Hall 00.000. At December 31, 2015, Hall reports the following balance sheet information: s determin l December Current assets Noncurrent assets (including goodwill recognized in purchase Current liabilities s 800,000 2,400,000 (700,000) Long-term liabilities Net assets $2,000,000 It is determined that the fair value of the Hall division is $2,100,000. The recorded amount for Hall's net assets (excluding goodwill) is the same as fair value, except for property, plant, and equipment, which has a fair value of $200,000 above the carrying value. This implies that the fair value of the Hall division without goodwill is $1,700,000. Instructions (a) Compute the amount of goodwill recognized, if any, on May 31, 2015. (5 points) (b) Determine the impairment loss, if any, to be recorded on December 31, 2015. (5 points) (c) Assume that the fair value of the Hall division is $1,950,000 instead of $2,100,000. Prepare the journal entry to record the impairment loss, if any, on December 31, 2015. (12 points)