nstructions: Use the information below to answer the questions that follow. Instructions

Compute the amount of goodwill recognized, if any, on August $31,2020.$

Determine the impairment loss, if any, to be recorded on December $31,2020.$ Assume that fair value of the $xYZ$ is $$2,600,000$ instead of $$2,875,000.$ Determine the

impairment loss, if any, to be recorded on December $31,2020.$

Prepare the journal entry to record the impairment loss, if any, and indicate where the loss

would be reported in the income statement.

Reporting of the impairment loss:

What Disclosure is required in the notes to the financial statements, if any for the impairment or goodwill?

n August $31,2020,$ XYZ company became a division of ABC company. ABC paid $$5,000,000$ to acquire

II of the company stock for $xYZ$ company. Below is the balance at the date of purchase for $xYZ$ company.

was determined at the date of the purchase that the fair value of the identifiable net assets of XYZ

ompany was $$4,725,000.$ Over the next $5$ months of operations, the newly purchased division experienced

perating losses. In addition, it now appears that it will generate substantial losses for the foreseeable

uture. At December $31,2020,$ XYZ reports the following balance sheet information.

is determined that the fair value of the $xYZ$ is $$2,875,000.$ The recorded amount for $xYZ\text{'}$s net assets

excluding goodwill$)$ is the same as fair value, except for property, plant, and equipment, which has a fair

alue $$150,000$ above the carrying value.