H~3&500 1 2 4 6 Required: Determine the amount of goodwill impairment, if any, that should...

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H~3&500 1 2 4 6 Required: Determine the amount of goodwill impairment, if any, that should be recognized at December 31, 20X4, if the fair value of the Plastic reporting 8 unit is determined to be 9 10 a. 11 b. 12 c. 13 14 7 Rubber Corporation acquired all of the common stock of Plastic Company for $450,000 on January 1, 20X4. On that date, Plastic's identifiable net assets had a fair value of $390,000. The assets acquired in the purchase of Plastic are considered to be a separate reporting unit of Rubber. The carrying value of the Plastic reporting unit's net assets at December 31, 20X4, is $500,000. 20 15 a. 16 b. 17 C. 18 19 Step 1: For Goodwill Impairment Testing 26 530000 485000 450000 27 28 29 C. 30 31 Goodwill Impairment 60000 a. b. Fair Value of Reporting Unit 21 a. 22 b. 23 C. 24 25 Step 2: For Goodwill Impairment Testing Carrying Value of Reporting Unit Fair Value - Carrying Value Fair Value of Fair Value of Reporting Indentifiable Unit Assets Impairment Indicated (Yes/No) No Yes Yes Fair Value Implied Fair Value of Book Value of vs. Book Impairment Reported Goodwill Goodwill Value (Yes/No) Goodwill No Yes Yes H~3&500 1 2 4 6 Required: Determine the amount of goodwill impairment, if any, that should be recognized at December 31, 20X4, if the fair value of the Plastic reporting 8 unit is determined to be 9 10 a. 11 b. 12 c. 13 14 7 Rubber Corporation acquired all of the common stock of Plastic Company for $450,000 on January 1, 20X4. On that date, Plastic's identifiable net assets had a fair value of $390,000. The assets acquired in the purchase of Plastic are considered to be a separate reporting unit of Rubber. The carrying value of the Plastic reporting unit's net assets at December 31, 20X4, is $500,000. 20 15 a. 16 b. 17 C. 18 19 Step 1: For Goodwill Impairment Testing 26 530000 485000 450000 27 28 29 C. 30 31 Goodwill Impairment 60000 a. b. Fair Value of Reporting Unit 21 a. 22 b. 23 C. 24 25 Step 2: For Goodwill Impairment Testing Carrying Value of Reporting Unit Fair Value - Carrying Value Fair Value of Fair Value of Reporting Indentifiable Unit Assets Impairment Indicated (Yes/No) No Yes Yes Fair Value Implied Fair Value of Book Value of vs. Book Impairment Reported Goodwill Goodwill Value (Yes/No) Goodwill No Yes Yes

Answer rating: 100% (QA)

Rubber Corporation Goodwill Impairment The amount of goodwill impairment at December 31 20X4 i... View the full answer